Boliden AB (publ)

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.

Thank you, Håkan. You can stay here. I only have one slide, and then you'll get to be part of the Of the questions. Anyway, regarding the guidance going forward, it's relatively straightforward. Regarding CapEx, 15 and a half, we said on the Capital Markets Day, 15 and a half, we say again, we're reiterating the guidance that we gave then. Regarding the maintenance stop smelter effect for 24, it's 400 million. It's relatively, by our standards, relatively small maintenance years. This is also in line with previous guidance. And then we are... little bit in a new format providing you guidance for the year on grades and there is no update here apart from the fact that we're adding the bulletin area that we've never really guided for before and not more than the kind of general one that it should be in line with the with what is in the R&R statement, but now we have a guidance for the two main metals, for zinc and for gold, in the Boliden area as well, coming to this here. And as I said, there's no change in the guidance we've given before, and in our mind, there's also no change in the internal budgets that we've had for the Boliden area. So with that, I'm reminding you all of our purpose, our vision, and our values, and I'm getting ready to take questions.

If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Adrian Jelani from ABG Sundal Collier. Please go ahead.

Yes, hello and good morning. A couple of questions from my end. First of all, On Tara, you mentioned that there was an agreement in place that the union now has to vote on. I guess, can you give us a timeline for how that process looks like? And if the agreement then does go through, is finalized, then when could Tara be back to producing again?

Regarding the timeline of the actual vote, it is shortly within the next week or two, although we don't control it. This is, of course, up to the unions. But what they have told us, they will try to manage this within the next week or two. Regarding the actual content of the agreement that we have done, I will, of respect to the unions, not go into any details. The unions are actually today informing their own shop stewards, and I think the members will get informed on the content of the agreement later in this week, and then they will vote. And as I said, I don't want to be the one who kind of leaks out the information beforehand. I want to respect unions and they get to inform their people in their own fashion around that.

Okay, that's very fair. I understand. And then on the key grades, both in ITEC and in GARP and Bayer, they were both below the 2024 guidance. I guess, was there anything unexpected, like a change in the mine plan or were lower grades in Q1 something you had accounted for already?

there is always a little bit of going up and down. Put it this way, this is not unexpected. We knew that, but we don't really want to guide for individual quarters. And when it looks at the plans for the whole year, it looks very much in line with what we had guided for before.

Okay. And a final one from me. There were a lot of things impacting earnings in the quarter, but if we just take If we take the 400 million from the strikes, you say 165 from lower grades and then 100 from the winter conditions, we get sort of that EBIT would have been around 1.8 billion, excluding revaluations. Would you say that's a fair starting point for coming quarters before then also factoring in, of course, higher prices and things like that? Have we gotten the main effects there?

I think yes. I'm looking at my CFO, but I think the answer is yes.

I think yes. We had some revenue from royalties as well. But it's in that area that we are, yes.

Okay, perfect. And in that case, that's all for me. So thank you.

The next question comes from Ioannis Masvoulas from Morgan Stanley. Please go ahead.

Hello, good morning, and thank you very much for the presentation. First question from my side, can you remind us what proportion of copper and zinc DCs are booked in Q1 based on 2024 terms?

Without having the exact number, order of magnitude, roughly half of the TCs in Q1 will be based on deliveries that were made according to last year's deal. So about half will be last year and about half would be this year's.

Thank you very much. And a quick question on the better working capital development in Q1. Is there any catch-up effect in Q2. You mentioned that some timing on paying for concentrate deliveries. But yeah, could you give us a sense on what sort of magnitude we should be expecting if there is a build to come in the quarter?

Again, put it like this. From the quarter end to where we stand now and to the end of April, I expect a working capital build of about one and a half to two billion. Then we expect a decrease in working capital in June. So hopefully that should be, you know, not too much of a build in this quarter. But it is, as always, quite, quite, there is some uncertainty exactly what happens at around the quarter end. But a build in April and then coming down towards the later part of the quarter.

Thanks a lot. And last question.

I'll just mention that, Håkan, but just also so everybody knows that in reality, when prices go up, of course, we tie more working capital into our inventory, which is this one. So that one should also be taken into account. I don't know exactly how much money it is.

No, but that's true. I was more referring to at constant prices. But you're right. The price increases does have a negative impact on working capital as well.

Sorry for breaking you up, Johannes. Go ahead.

Very clear. Thank you both. And last question on Tara. You mentioned the preliminary agreement you have with the unions, but I wanted to ask around other aspects of the cost base. Is there any progress on power, on freight, or any taxation, any other parts of the cost structure that you're looking to improve?

let us do the following, that we will announce all these things as we hopefully will have a kind of signed agreement with the unions, which is the path to opening Tara. We will be then, once that's clear, be much clearer about the total situation and what the impact will be on costs and on volumes and so on.

Very clear. Thanks so much.

The next question comes from Liam Fitzpatrick from DB. Please go ahead.

Good morning, everyone. Just two or three follow-up ones. Firstly, on ITIC, I just wanted to clarify how we should interpret this 150 million grade impact. So if you recover from the low grade that we saw in Q1 to the 0.17 guidance for the year, we should roughly assume around 150 million quarterly pickup? That's the first question. Then just, Mikhail, you mentioned something about negative provisional pricing through Q1 that was poor in Jan-Feb and then got better in March. Can you quantify that in any way for us? And then lastly, just on the project front on Kivica, the phase five, when do you think we'll get an update on the timing and your plans there?

Thank you. Let me take the last one and I'll leave the other two ones for Håkan to answer. But regarding timing on stage five in Kivica, I will say that we're probably talking either late this year, but more likely early next year for a decision. But it's been said many times regarding Kivica, it is not that we have to make a decision or we kind of lose a deadline. We can postpone that decision if we feel there's genuine insecurity. That might make it a little bit more jumpy ride in Kevitsa because we will then let go of resources that could be used for stripping that would then, if there will be a later decision, would have to be taken in back for an accelerated stripping. But we'll see. I mean, you understand, everybody will understand that what is happening right now in the nickel market is, of course, not really good for a Kevitsa Stage 5. We'll have to see where the nickel market will go. go and so on before we take a decision there. Now I'll leave the other two ones regarding the grades and the provisional pricing to you, Håkan.

Well, provisional pricing, let's see if I recall that number right. I believe we had about minus 50 in the quarter. I'm looking at Olof to see if he's correcting me and he is not correcting me, so let's go for that. And You know, quarter to quarter, we had 150 million negative on the grade side. And that, of course, means that we're going to mine at higher grades than what we've guided for in the remaining quarters to catch up those 150. I'm not sure if I understood your question right, but it's correct. We're going to mine above 0.17 for the remainder of the year.

Okay.

All right. Thank you.

The next question comes from Victor Trollston from Danske. Please go ahead.

Thank you, Operator, and good morning, Mikael and Håkan. Just if you could help us with, you know, how much volume do you expect to come from Likavara in 2024?

That's a good question. I can't remember right now exactly what the tonnage is. It's a relatively small percent because right now we're stripping and we will get ore towards the end of the year coming out of there. I'm looking at you. Do you recall exactly what the amount of tonnage is?

I don't recall exact tonnage, but it is included in the grade guide and it is included in the normal throughput.

It's a couple of million tons, but I don't know exactly.

Okay, super, super. And is it still fair to say that at a sort of full run rate, you could do 8, 10 million tons from there?

We said that about 20% of the total feed is expected to come from Lika Vara over time, and that's about 9 million tons.

Okay, that's super. And sorry for pushing on this, but would that be possible already in 2025? Or is it anything in terms of ramp-up that sort of hinders that?

The answer is I think it's possible. Whether it's going to be exactly that way is going to be a decision as we kind of optimize the mine planning towards the end of the year as we start looking at that. But I think it will be possible. It will be open for that kind of volume.

Okay, that's super. And then secondly, just on perhaps your thoughts on global smelting with spot PCs at these levels. I guess if you could first just remind us, I guess your contract structure is still around 15%. spot, if I'm not mistaken, both on copper and zinc. But how does it look for the overall global smelter? And are we now in a situation where we should see more curtailment? Yes, your thoughts on current spot to see, I guess.

Yeah, well, the current spot TCs, for those of you who don't know, the copper spot TC is basically close to zero. There's also rumors that there have been deals done at negative TCs for copper. For zinc, they're not negative, but they're very low. This, of course, is a sign that right now the... It's a tough business to be in smelting. And yes, the question is, I would expect that we will see curtailments in different parts of both copper and zinc smelting, but exactly when and where and by whom, I do not know. Having said all this, we should also remember that especially for copper smelters, TECs is not the major part of... of the total returns for a smelter. The free metals is a more important part. And as I just said, we are now right looking at record gold prices, which means that the free metal part is big. So when you look at the totality, it is not as bad as you could think just looking at the spot TCs, but it is tough.

Okay. No, that's clear. That's all from me. Thank you very much.

The next question comes from Jason Fairclough from Bank of America. Please go ahead.

Good morning, gentlemen. Thanks for the update. A couple of quick ones for me. Just to confirm, actually, the Platts TC this morning is actually negative 50 cents, so we are in a world of negative treatment charges for copper. Look, first, just on the strikes in Finland, obviously Q1 impacted. How do we think about this into Q2? Are there some lingering impacts or should we not see too much impact from the strikes? And then just a second one was on Tara. As and when you get to the decision to restart, how should we think about potential capital outlay to get it restarted? Is it zero because it's been on care and maintenance? or is there actually some costs associated with getting that restarted?

Let me start with the strikes in Finland. Just to be very clear, the risk of political strikes in Finland is not over, even though as we speak there are none. But the unions have threatened that it might come back. I don't know if it will or not. If we assume that it will not, then we should see no additional impact in Q2, and we will have a reversal of around 200%. million Swedish krona that was stuck into inventory that will be released during Q2. So you would have a one-off positive effect of 200 million, assuming that there will be no more strikes, which we pray for every morning. Regarding TARA and the startup cost, Once again, I don't want to get in too much detail because it's linked to what is written in this contract proposal that's now going to be voted on. In terms of startup costs, in terms of capex, kind of normal capex is going to be very low. We have the equipment that we have. We don't need any real capex for that. But there will be ramp-up costs linked to the fact that we need to get people in and we will most likely need to do training with people and other things to get going. So there will be some ramp-up costs regarding that. And then we will see whether there will also be some redundancy costs. So yes, there could be some one-offs related to those two types of costs.

Okay, thanks very much. Could I just follow up on the TCRCs? So if you look, we've had the CEO of Arubus in the press basically calling for protection for the metals industry. because he says that there's market forces here that are just not fair, that are not normal, and the industry needs protection. How do you think about that?

I would rather wish not really to comment on that. I think you can, of course, always, when you get tough prices and terms, you might want some protection. But, of course, this is a part of a bigger game. I would say that... Even if Roland is, of course, talking about the copper industry, I am more concerned about another value chain, and partially because of Boulidon, but maybe more because of all of Europe, and that's nickel. If Europe really wants to have some kind of nickel industry left, they're going to have to think about those kind of discussions as well.

Okay. I appreciate the call. Thank you very much.

The next question comes from Amos Fletcher from Barclays. Please go ahead.

Yeah, morning, gentlemen. I have three questions. The first one, just following up a little bit from Jason's question on the second quarter impacts from the strikes. Obviously, the strike carried on for another week into Q2. You were saying there would be 200 million released from internal profits. But what would be the quarter-on-quarter delta effect? on the sort of operational side is the first question. The second question is just on the Boliden area guidance for grades for zinc is pretty low versus reserve levels. You know, what sort of timeline should we expect kind of grade trajectory to get back to reserve at Boliden area in future years? And then the final question is basically the same question, but for Kvitsa. I was just wondering if you could give us some updated thinking on, you know, when we should expect Kvitsa grades to reach reserve levels as well. Thanks.

The Boolean area is regarding... There's a reason why we have not guided for grades before, and that is that the Boolean area will have jumping grades, and as we're now starting to guide for grades, we will have deviations both up and down for every quarter. And one of the reasons is that there are... Certain areas that are, you know, has almost no zinc. Others have a lot more zinc. There are certain areas that have lots of gold and others have not so much gold. And all this mixture makes it very difficult to kind of predict, especially if you look at individual grades. I'm looking a little bit at Håkon, but I think when we look at the total package of the Boliden area, with all the grades involved, we're actually in value pretty close to the... R&R statement. So I wouldn't look individually into specifically zinc. I'm not quite sure about that. And as I said, this will jump up and down as we move forward. On kibitz, we're quite pleased that we've gotten further up, but we are in a natural way right now, moving over to our pushback number four. The pushback number four is coming down. And as you know, you always have the best grades as you get down towards the bottom. So we will nudge up towards the average and then beyond the average to make sure that the average works out as we move forward. And then we had the strike impact. I'll give it to you.

We had in Q1, we had a total of 400 million. negative impact from the strikes. Out of that, about half, about 200 million was a direct impact on production and the remainder was lost revenue in terms of not being able to deliver an invoice material. So a negative 400 in Q1 and in Q2 we expect a positive 200 when that material tide is released and that will appear both as internal profit, a positive impact on that, and also in the smelter results. The operational impact in Q2, I expect to be very, very small.

Yeah, we can say that if that was a question, but the first week that the strike was still going on was once again the ports and the railroad system that we were producing. And given that that strike then ended, we have or are in the process of being able to ship out the excess finished metal inventory that we have. So that particular week of strike should not impact the results much at all.

Okay, got it. I guess a very brief follow-up just on the Bolivian area side. So looking at your R&R, the total, the reserve grade for zinc is 3.8%, and as I said, guidance for this year is 3.0. So it was just really a question of, yeah, what timeline can we expect?

And as I said, this will be jumping over time depending on which parts we're in. It will always be that. And as I said, when we have less zinc, it usually doesn't mean that we have zinc ore of lower grade. It means that we have less zinc ore going into the concentrator and rather ore that is rich in copper and in gold.

Okay, understood. Thank you.

The next question comes from Christian Kopfer from Handelsbanken. Please go ahead.

Thanks for that. Good morning. Two quick questions from my side. Firstly, on metal premiums, I see you reported quite a big negative number here. Quarter to quarter, I think it was. Yeah, it was minus 150 million versus the fourth quarter of last year. How do you see metal premiums for Q2 versus Q1?

The largest part of our premiums are on annual contracts, which means that, and we should have spoken a little bit more about that, but you're absolutely right, Christian, that the annual levels of premiums for 2024 is much lower than 2023, which means that you should expect a similar level in Q2 as we saw in Q1.

Okay. That's good to know. And then finally, on costs for the mines, typically, at least what I see historically, unit costs in the mines are heading upwards in Q1 versus Q4, but it seems a little bit like the opposite this quarter. So the question is, in Q2, do you think unit costs will more or less stay at these levels for the mines, or should they come down a bit for Q2 as Q2 is typically lower cost versus Q1?

That's a little bit of a good question. I think that Håkan pointed out that if you do the Q1 over Q4 comparisons, we did have a couple of extra costs linked to those maintenance issues that we had in Q4 that we have not seen in Q1 that has helped us and so on. And going into Q2, I don't know if we have any real kind of guidance around that.

Now, I don't think we can provide guidance with that granularity, but I can say that there is a very strong cost focus in mines at this time, has been when prices came down. And on top of that, we see market prices on consumables coming down. So the cost side is looking good. I don't think I'm prepared to promise an exact number for unit cost for Q2, but as a general comment, it is looking good.

Yeah, I can just recognize how it looks historically. And historically, costs are, if you look per ton of mill door, Q2 is typically lower.

That's right. And we typically have a bit lower throughput in Q1 due to winter conditions and so on. And that, as such, is not different this year. Okay, that's very good. Thank you very much.

The next question comes from Johannes Grunzelius from DNB Markets. Please go ahead.

Yes, good morning, gentlemen. Johannes here. I have two questions. The first one is on the ramp-up of ODDA. If you can provide some color how we should look at the ramp-up. Will it sort of be an immediate positive for you or do you expect the first few quarters to sort of be be quarters where you take extra cost and the actual impact is sort of negative. That would be very helpful if you can provide some insight there, please.

Well, I can say that we expect ramp-up to be relatively quick and relatively smooth, and of course, once I said that, of course, there is, of course, always a risk that there could be something else, and as we have guided for, the ramp-up is expected to happen during Q4, and basically as of Q1, we should be able to produce relatively full.

Okay, good to know. And then maybe I missed this, but what's the latest regarding the The insurance compensation for the run scar, is there anything new there to be said?

I would say, but I'm afraid not so much news. There is a lot of technical work that the insurers need to do, and I have respect for that work. We have the feeling, and that is a feeling that is throughout our organization, that this is working well, so we're confident in the outcome, but I cannot give a timeline at this point.

You should maybe point out... Just to be a little bit, if you're now the insurance company, just to give a little bit of kind of flavor on this one, they are looking at us a little bit saying, what's the big hurry? We're not really going to pay you much money in terms of anything until you actually start investing. That's when we'll start doing the payments. and in the meantime we have a whole set of reinsurers in the background that we need to manage and everything else and we have a big investigation and we're you know have to remember that we're an insurance company we do things really slow and therefore this takes a time uh whereas we would like to have a hundred percent clarity saying that you signed on the bottom line you will pay and that's not really their their mode of working but i would say as hogan said we have a very good general climate of discussion and and we are not really It's more for us a kind of frustration because of the accounting rules that we need to have a certain piece of paper. When we have it, something happens. And when we don't have it, nothing happens. And the insurance companies are not really so focused on that piece of paper.

Okay, I understood. But what you've indicated before, I think you've talked about plus 4 billion as a floor of what you can get from the insurance companies. This is still relevant, right? 3.4 ceiling that is for sure a ceiling we're not going to go beyond that 3.4 okay okay got you got you thank you uh my final question yes yes go ahead yeah my final question is then on on the headwind from from the thesis and this has been discussed in the call but just to be a little A little bit certain here. How should we think about the incremental headwind in the second quarter versus the first quarter? My feeling is that we're talking about relative small numbers, right? Sort of less than 100 million in negative headwind from lower synthesis. Can you confirm that?

If I recall it correctly, in the EBIT bridge in smelters, I think they reported about 130, 140 negative quarter on quarter. And that reflects about half of the volume. So I think you should add about 130 to 140 more to get the full impact. Right. Very clear. Thank you so much.

The next question comes from Ola Sodermark from Kepler Chuveryax. Please go ahead.

Yes, hello and good morning. Just a follow-up question on the other line. It was a little bit bigger negative deviation there than we had expected. I know it's a volatile number and a lot of moving parts, but are any the kind of inventory you hold for related to a finished strike included there or another moving parts from the finished strike that are including there.

We talked about other in the EBIT bridge right?

Yeah.

Okay now what goes in there are or typically balance sheet evaluations of accounts receivables and such things. So nothing in particular related to the strikes. And then it might be one-offs that we for some reason do not include under items affecting comparability. So now there's nothing really connected to the strikes in there.

Okay, and you expect it to swing back? during the second quarter. Thank you.

As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. The next question comes from Richard Hatch from Burenburg. Please go ahead.

Yeah, morning. Thanks for the call. I'm just trying to work out on working capital. I wonder if you can help us. So if I look at the balance sheet, inventories built by about 1.4 billion kronor, receivables came down a little bit, and then payables came down a little bit too. So on my math, you should have recorded a working capital build of 1.4 billion Swedish kronor based on just a basic, simple working calculation, which I think should be fairly... fairly easy to look through, but you've reported 187 million release.

The main difference between the two is that if you look at the balance sheet, you look at the exchange rate at the last day of the quarter, and when I talk about the cash flow impact, that's on average rates through the quarter, and that has a fairly big impact, so that will be the main difference.

Okay, thank you. And then Can I just ask on the throughput of Garpenberg? You kind of talked to a record mill volume there. Can you just help us kind of think about how we should model that for the rest of this year and then in future years?

Thanks. I think that you should model it at 3.3 million throughput at an annual pace. That's what we have guided for.

All right. Thanks very much.

The next question comes from Igor Tubic from Carnegie. Please go ahead.

Good morning, gentlemen. Thank you for your time. I just have one additional question, and that's with regards to the smelters. You mentioned in the report that you had some failure with the electric arc furnace and with the dryer in Harjavalta. Is that solved now, or should we expect that that will impact Q2 as well? Thank you.

That is solved, so that should not in itself impact Q2. Okay, thank you. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Boolean Company and we're doing that in the spirit of a hundred year celebration and I hope that you will all be able to in some way also feel that spirit. Thank you everybody.