Boliden AB (publ)

Ladies and gentlemen, I'd like to welcome you to Boliden's Q3 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. We will also have a Q&A session which we will start here in Stockholm, which I will moderate, and then we will go on to questions on the web. Mikael, welcome.

Thank you, Olof, and good morning everybody here in Stockholm and also online. And welcome to a Stockholm that today is maybe a little bit of a grayish weather, but what I think is a pretty good and strong performance that we have today. So let me start and get right into the highlights of the report that we're presenting right now. First of all, we have improved prices and terms compared to last year. Compared to last quarter, they're about the same. They've been changing around during the quarter and ended up on a relatively high level in the end of September. We have improved production, especially in mines, but also in smelters. And we have a record mill production in Garpenberg actually for the second quarter in a row. This has now gotten so well and so well under well in Garpenberg that it's actually now the environmental permit that is our limiting factor for production in Garpenberg. And I'll come back to that question when we look at the outlook going forward. The key projects that we have are all well underway. The other project of course had an adjustment of the time plan and the CAPEX that we came up with a couple of weeks back, but that now revised plan is still standing. Together with that, the ITIC project is very near to completion, there's very little that's left, and it looks very, very good, and we're having the absolute last inspections there, and we're very confident that we will reach the full functionality that we wanted to get from the dam in ITIC. The project in Kristineberg Revliden is also moving along nicely for a commissioning and startup late first quarter or early second quarter next year. Then the two very new projects that we have is, of course, Early Days Hotel, but so far so good, both in the tankhouse project in Rönnskär and in the PACE project in the Boliden area. The restart of the Tara is also moving according to plan. We had our first blast last week, and everybody is now who is supposed to be back, is now back on the roster and back at work. And the production is now ramping up during the rest of Q4 for full production in Q1 with the new revised production targets that we have. We've also, during the quarter, we have submitted an application for a mining concession in Laver. And we'll see how long that will take this time to get that one through. The financial performance in the quarter, I would say, is very nice. We've had an operating profit of just one million shy of three billion. The cash flow is still negative on about half a billion, given the high investment rate that we're having. And we've also been tying some working capital within the quarter. The capex of a little bit more than three billion is in line with the total guidance for the year of 15 and a half billion krona. On the key projects, just an update. On the ODA expansion, we will already during Q1 next year be able to go back up to 200,000 tons per year because we will have the new foundry and the new tank house in place, which means that we can run the old roaster full speed and be able to get that through. But the one that is time limiting is the new roaster, which is the one that is scheduled to be commissioned in late Q1. That's going on and that's when we will get up to the 350 speed when we have the new roaster in place. IT reinforcement is moving on as I said before very nicely. It's planned to be completed at the end of this year and it looks very good. There are only very small minor things left and then the final inspections on the quality of the new dam. The Kristneberg expansion, as I said, we are already doing some production from the rev lead and deposit. However, through the old infrastructure, the new infrastructure is online to get commissioned late Q1, early Q2 next year. The tankhouse, as I said, very early days so far. The groundwork has started. You see this here in the picture on the slide where it's going to be and how we've started with the earthwork and the ramp up is scheduled for the second half of 2016 no 2026 sorry and the boolean area extension with the with the pace project and the tailings management the ground worker has start there as well and that's also moving on nicely and the tara reopening we have all the people back and on board it again and we have gotten all the kind of paperwork done that we need with authority, and we had the first blast last week, and the milk production is going to ramp up a little bit during this quarter, but basically going full from next quarter. On the ESG side, the The CO2 emissions are up compared to last year. This is actually, according to budget, below the budget. And the main reason why this is going up is the ITIC project, which has, of course, led to lots of diesel consumption related to those movements of material. The LTI frequency is also nothing that we are really proud of in that sense that we've had once again a relatively weak quarter on that. We are working hard to try to reverse this trend that we're seeing right now. We don't have a very quick fix. If we were to have one, we would have fixed it a long time ago. But we have several leads that we're working on and trying to make sure that we come back on the positive trend that we had for such a long time. The sick leave is very stable on a level which we consider too high. We wanted to get down to the levels that we had pre-COVID, which was around 4%. But we seem to have difficulties coming down all the way down there. This is not unique to us. Many other companies around where we operate have similar issues. And I think that's something that we're going to work on. But still, the ambition is to get back to pre-COVID levels as soon as ever possible. On the market side, the base metal prices have improved. They have improved clearly versus last year. And then they improved during the quarter as well. The precious metal prices are at an all-time high. And it's improving versus both periods that we're looking at. The spot TCs are weak for both copper and zinc. This is not affecting us so much. As you know, we have the majority of our feed coming through benchmark. So it hasn't affected as much in the quarter, I should say. And we have a slightly weaker US dollar. And here you can see in the graph how the total index that we have for prices and terms is developing. If you look on the main metals that we have, our three main metals, you can see both in copper and zinc, it looks like the whole world is becoming more and more cost efficient regarding mining because the costs in basically all brackets of the cost curve is going down quite a lot over the last two years. But this is a little bit of a fake news, if you want to use that word, because it's about the high precious metal prices, gold and silver, that comes as a credit in these calculations, which pushes down the prices. You can still see that copper is, for many reasons, maybe good reasons, still hovering quite far above the cost curve, which means that everybody in copper mining makes relatively good returns these days. Zinc that used to be down, that it was difficult on the margin to make money, now the prices have come up a little bit and it's now safely above the cost curve structure. And then you can see nickel where it's clearly an issue where something is going to have to give on the nickel side. Either there will be clearly lower nickel production coming out or there will be some adjustment of nickel prices because at the price levels that we've seen here, it's very difficult to get nickel mining to be sustainable. If you then go to Bolide and look at our production, the Aytig mine has been improving production. Still not really up to the level where we want it to be, but it's coming up and the ramping up of Likavar is coming, although a little bit slow, but it's still coming. The grade right around where we have guided it to be. Garpenberg, record mill volume. It's been a very good production quarter. Grades around where they should be. Kivica, 2.5 million tons, a little bit less than last year, but you know that the permit in Kivica is 10 million tons. So 2.5 is right on the permit level, even though you can play between different quarters. So stable production around this capacity and grades around where they should be. Clearly stronger than last year's low grades. The Boliden area is the very strong performer this quarter with a very strong production. We have record for gold production coming out of the Kankberg mine in general and very strong grades and throughput coming out of the Boliden area. In Tara, there was no production in the quarter, as I said, but we did have the first blast coming here. Moving over to the smelters, Rönnscher has had a series of smaller in smaller kind of disturbances, especially in the lead line. But you know, everything is integrated, so it kind of spreads across. It is a challenge to run a place like Rönnscheib without a tankhouse. Harjavalta, very strong production, strong cathode production around this and basically generally good production in Harjavalta. Also nickel doing good in Harjavalta. In Kokkola, I would say outstanding overall equipment efficiency, very good availability and a very good production coming out of Kokkola. And all that has had some challenges. Um, Partially it's due to the tankhouse floor that is permanently closed, linked to the project, but also having a maintenance stop. And then on top of that, you have a project next door that is working all the time, makes it a little bit difficult to maybe be totally focused on production all the time. So the quarter was not stellar. Barrister has also had several minor disturbances during the quarter. But if you look on total production, you see that we're going up both on copper cathodes and nickel production is also very strong. With that, I'll leave it over to you, Håkan, to talk a little bit about financial summary.

Thank you, Michael, and good morning. As Michael already said, we are reporting an EBIT result excluding process inventory of 2,999, so just shy of 3 billion. This is an improvement of about 1 billion compared to both comparison periods. then adjusting for the one-offs that we had in Q2 relating to insurances. Free cash flow, a negative half a billion. I'll come back to that. And earnings per share, 8.34, which is close to a 70% increase compared to last year. Breaking down the performance by business area, it's evident that we primarily had a very good quarter in mines, reaching in excess of 2 billion. In there, in particular, I'd like to highlight Garpenberg and Boliden area that contributed very much to this increase. Solid quarter in smelters and relatively small movements in the eliminations, adding up to close to 3 billion. Moving on then to the comparisons quarter to quarter, and this is comparing Q3 this year to Q3 of last year. Prices and terms are up 400 million. In there, there is an increase of metal prices, adding up to 1.1 billion, where precious metals, gold, silver have had a good run, also copper and zinc, which is then partly offset by lower premiums, lower TCs and lower exchange rates. Moving on to volumes, we see an increase of 1.1. Out of that, mines correspond or add up to 800 out of those 1.1, and we see improvements across the lines. It's higher grades, it's some inventory reductions, it's stronger mill production, so a strong quarter of mines, but also an improvement on the smelting side. And there we highlight in particular the performance of the Finnish melters, Kokkola and Harjavaltadel had a good quarter. On the cost side, we have a negative impact of 287. And of course, with that volume increase, there is some variable costs coming together with that. So that is one part of that. We've also had some general increases in a few of our sites. In Rönnsjö, for example, we have comparing to last year, higher cost for the whole anode handling process, which is a result of the new business model that we're running. In IT, some cost connected to the Lycavara startup and in Ola as well. But in general, mostly a cost-to-cost movement related to volumes. Moving on to a sequential comparison with Q2 this year. As you can see, the impact from prices and terms is very limited, 83 million. So a small change there. We've had slightly lower metal prices, but slightly higher byproduct prices. But again, small movements. Volumes up 560 million. We have had... Higher volumes in smelters due to larger maintenance stops in Q2. But again, most of this increase is in mines where we have higher milled volume and improved grades. I mean, in particular, Garpenberg and Boliden area performing well. Costs are about 600 million lower than the previous quarter. There is a significant element of seasonality, which is slightly more than 200 million that we typically spend less in any given Q3 due to vacation periods. But there is also an effect of lower maintenance. Q2 was a quarter with fairly sizable planned maintenance stops in the smelting side that we didn't have in Q3 to the same extent. And then a big chunk here, which is related to items affecting comparability, and that was two big items affecting Q2, the insurance income in Rönnskär, and then on the negative side, some restructuring in Tara. Moving on to cash flow, I think I've covered the operating profit side. Working capital, we're tying about 1.4 billion. Out of that, about half a billion is a function of price movements, and the remainder is a volume increase. In the cash flow, I should also highlight that we have a positive effect, about 200 million from insurance payments that we have, insurance considerations that we have received in the quarter. CapEx is a number that is in line with what we guided for the full year, and then it adds up to a negative half billion for the quarter. Moving on to capital structure. Fairly similar to the recent quarters, we are at a net debt to equity of 24%, which is slightly higher than the years 2020 to 2022, but not standing out so much if you look further back in the history of the company. Still strong payment capacity of just over 12 billion, so a balance sheet in good shape. So with that, I want to take it.

Thank you, Håkan. Just very briefly, the Capital Markets Day you know about. It's going to be held in Åda. We're going to show off the brand new smelters, you old guys. The actual capital market information will happen in Bergen, and then we will make the excursion to Åda. later that first evening and on the next day. I think that you all who are affected should have gotten a separate invitation. If you haven't, you can contact Investor Relations at Boliden and get that in place. It's getting to be relatively full relatively quickly. Especially if you want to go to the Odda excursion, you should not wait too long to get in there. Now, regarding outlook, let's go through this one step by step. Number one, CapEx. We came up with this one a couple of weeks back. There are no changes. $13.5 billion next year, $15.5 billion for this year. Regarding maintenance, we will not have any planned maintenance in Q4. There should be no change in any way. We have the insurance income that we just wrote in. We got out of that last 1 billion that we expected, we got 935 confirmed by the insurance company just a few days back, and that will affect Q4 as a number. Someone can argue, where are the last 65? Well, there are lots of things in and out within insurance, and we're not done with that totally, but this is what we have received as a confirmation as of right now. And Tara will continue to run negative through Q4. We can say basically we have now full costs, but we will not have full production. And we are expecting a negative 25 million euro result in the quarter. Now, regarding grades, you can see here that we are reiterating the 2024 grades across the board, except for the Boliden area, where we're guiding up a little bit regarding the grades. And that's because some of you will have made the math that if you wouldn't do that, there was basically no grades left for Q4, as there's been so strong grades actually throughout the year in the Boliden area. We will, though, have relatively weak, if you make the math here, even though we are guiding up the grade, we will have a relatively weak Q4 regarding grades in the Bulletin area. We will have to mine the weaker areas as well that we haven't mined so much of during the earlier part of the year. We should also say regarding Garpenberg, and I pointed that out, that now the environmental permit is now the bottleneck. The environmental permit is 3.5 million tons, and we will not be able to get any kind of exemption from that, which means that we can only do about 780 or so thousand tons in Q4, which will be a lowering. We have, as I said before, we have initiated a process to increase the... The permit in Garpenberg said that the permit will not be the bottleneck for production, but actually the production will be the bottleneck for production. This is a process we have initiated. We have ambitions to get that in during the end of this year and to get that permit during next year so that next year the 3.5 should not be the bottleneck. However, you can never be sure either on the result of such a test or on the exact timing of it. But right now, 3.5 is the bottleneck and that will affect Q4 negatively. Looking then into the grades of next year, I don't think there should be any major surprises here to anybody. We're having one more year of low grades in ITIC, which I think is in line with what has been guided before. Garpenberg is coming along, but as always told, in these underground mines where we are mining clearly above the average in the R&R statement, we will slowly come down according to these pieces. In the Boliden area, you can say it's not really that much changes. Boliden areas should be no question. In Kiev, we have not guided yet, and that's because we are doing a review of the plans in Kiev. It's both related to dam construction and how the dam construction will play in, what kind of parts we have, but also with some geological information and also a potential... how we will play to keep the option of a potential pushback five alive. Maybe we can postpone the actual decision, but we will keep the option alive further out. All this is a relatively big equation that might also affect the grades for next year. And we'll get back to you once we have gotten those things under control in a separate communication. So with that, I will then leave the floor to you, Olof.

Yes, ladies and gentlemen, that opens up our Q&A session here in Stockholm. And we will start with Johannes Grönselius, The Norske Bank, please.

Thank you. It's Johannes Grunsellius here at EMB. Can I start off by asking you about the grade guidance, 25, ITIC, it's 0.16. I was more under the impression that 24 would be the low point year. And then you have Likavara, which is the blend of, is it one-fifth, which comes with rich ore. So can you elaborate a bit on that? And you also mentioned that this is the last year with low grades in ITIC, if you can give us any color of beyond 25.

I cannot really give you any color beyond what we gave on the capital markets day. That's the latest information is out. And if you read that graph, it's pretty clear that there are three pretty low years, which of 25 will be the lowest and 26 starts a little bit of a pickup. I have no further guidance on top of that. So we'll come back to guiding exactly how that

return should be but as we always said that since we have an average in the rnr statement of of 0.23 of course at some stage we'll come back not just to 23 but also above 23. and a second question on on the ore if you can give us any sort of color what do you think about i mean the design is 45 right and you're running at 40 if you see that as achievable for the next few quarters

Yeah, the design is at 45. You're absolutely right. And we have this quarter, we have basically 41 as a pace. It should be able to pick up. Some of these issues that we've had with the startup of Likabara should be behind us. That is helping on the amount of tons. So it should be coming up. But you're absolutely right. We've been struggling to reach the 45 in a consistent way, even though we've had 45 at individual quarters.

Thank you. Yes, good morning.

Just to follow up on ITIC, is it possible to quantify the impact of ramping up and also the construction of the improved dam facilities we have there? I assume it has impacted the total volume of the mine.

Yes, but the effect is more indirect. It's true that there's been some competition for trucking capacity, which has been negative for the mine, and that should kind of come away. And there's also been a little bit, when you have lots of activities in certain areas, of course you run the risk of kind of being in the way of each other. So the end of the dam project should, on the margin, be positive also for the mine production.

And a follow-up on the Garpenberg mine and the new permit you have there. What timing? I know it's impossible to say, but with your experience and so on.

Well, number one, it's not a brand new permit. It is an alternation of the existing permit, which is good in terms of timing. What we can control is to get all the preparations done that needs to be done to get it in, including, as those of you who read Swedish newspapers know, that we have public consultation, quite a few of them, during the fall, which is out there. Our ambition is to get the actual application in within the next few weeks, clearly within this quarter. We think that we will get a permit, and we think we're going to get it at 4.5 million, but you never know. And we think we're going to get it during next year so that it will not be a limiting factor for 2025. But we can never be 100% sure until we get it. Thank you.

Christian Kopfer, Handelsbanken, please.

All right. Thank you very much. A couple of questions. Follow-up on Ola's question on Garpenberg on the new... permit probably during next year. What kind of investments are we talking about together? I guess it's primarily the bottleneck in CapEx?

Now, just to be very clear, we are applying for a bigger permit to make sure that 3.5 is not a bottleneck for us. And the number 4.5 is picked in the sense that that's a number which is big enough so it should not really be a bottleneck, but it's still small enough that we can do it within an alternation of the existing permit, not having to apply for a brand new permit. kind of parameters. We have not yet said anything about exactly how much we're going to produce or whether we will do any investments to get to a higher level. If we're just saying that we want to get the three and a half away as a bottleneck, because clearly we can produce three and a half or maybe 3.6 or 3.7 with the existing infrastructure that we have. That's what we've proven this year. Without any limits, we should probably have reached or whatever, 3.6 for the year. So there's more about that, making sure that we can utilize what we have. And then, of course, we can think about expansions, but we have not yet communicated any of that.

But when it comes to expansion up to say 4.5 million tons, could you do that with the bottlenecking capex or do you need another line in the mill?

Most likely the mill can be done by the bottlenecking, but the big problem is the shaft and how to get the ore up. That one is very close to capacity today and we're looking into that and here there are many things that play in here because we will need a second shaft in Gartenberg anyway even for the same production at some stage because with the mine the the getting deeper and deeper so we need to get deeper with the shaft but exactly how these things play out and when it's too early to tell all right Antara

So let's just assume that everything looks... I mean, the byproduct in Tara is lead, right? Yes. All right. So if you assume current lead price, what kind of C1 cash cost do you think Tara will be 2025?

A dollar.

One dollar, yeah?

One dollar. All right. Okay. We have him guided for this, Christian, so it's out there. All right.

Sorry for that. Any other questions here in Stockholm, please? No more. Yes, one more from Johannes here.

To take another question, could you give some color on what you see in pricing for the smelters? I mean, we know about the weakness in Asia and the risk that it is spilling over. And when, just to remind us, when is the next sort of quarter when you will go on new annual contracts? That's more in the second quarter next year, right?

Well, I mean, the contracts are for copper negotiated typically in November and then good as of January 1, the annual benchmark contracts. On the zinc side, they're typically negotiated in February and March, but then retroactively effective as of January 1. Then we always have some inventory, typically a month or six weeks or so on, that is delivered before the end of the year and thus priced according to the previous year's benchmark that we will then consume during the first half of the first quarter, both for copper and for zinc. So that's the way the mechanics work out.

What did you see in the spot market in Europe? Was that a major weakness or was it more stability?

Now, the spot market in terms of TCs is a global market, and those TCs are very low, very, very low spot TCs. How that will play into the benchmark negotiations, I don't know. We're not part of that. What is more European locally are the premiums, and the premiums are... on a stable, relatively low level, but as Håkan pointed out, compared to last year, they're lower. They're not moving that much in terms of the premiums, will be my guess right now. And then we have the byproducts that are also relatively stable on a maybe too low level. Thanks.

Okay, operator, then we open up for questions over the phone, please.

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Liam Fitzpatrick from Deutsche Bank. Please go ahead.

Good morning. Two questions for me. The first one on Kivica and then second on M&A. On Kivica, I appreciate the review is underway, so there's not too much you can say at this point, but can you give us a little bit of directional guidance in terms of when you think it will be complete and based on the decision, whether you go ahead or not with the pushback, what that is likely to mean for grades versus this year or versus reserve grade? And then can you give any high level kind of capex guide for the pushback? I think historically it was talked at around three to four billion. That's the first set of questions. And then secondly, on M&A, I know you won't comment on specific assets or processes, but are you on the lookout for opportunistic acquisitions or are you very much focused on your internal organic options? Thank you.

I'll start with the second one and say that we are, and as you know, mainly focused on our internal options. We have, apart from the investments we're already doing, we have maybe a handful of potential options that we're playing with going forward. And that is our focus. And that's what we historically have created most value. Having said that, it doesn't mean that we're not looking. When things show up, we will be looking. But beyond that, I have no other comments. Regarding Kivica, we are hoping to get either late this year or early next year to come out with the revised plan, just to be very clear around that. There are quite a few moving parts. Those of you who read the R&R statement last year know that we had to take about five years out of the reserves and put them into resources because of a dam. dam permit issue and dam construction issue that we had in Kevitsa. That in itself is a kind of interesting thing to work around. Looks quite positive in a sense that we're able to sort that out, but that needs to be done. That has consequences for mining sequences in itself. And then we also have the potential for a pushback five. And here the idea is just very clear. It's not that you should expect that suddenly there is a decision on a pushback five coming in the next few months. No, we are working on keeping that option alive and keeping the option alive in the sense that we can maybe decide later. The later we can decide the better because as you all know the nickel price is a relatively difficult thing to forecast especially at this time. And therefore, I will not speculate on the other parts around how much would it be and when would it come and all these things. That's way too early.

Could you comment on if you delay, let's assume you delay pushback five for all of next year, directionally, what could that mean for grades in 2025?

Well, I care not to talk about it, because one thing is the pushback five, yes and no on those options. Another thing is also to get access to some material, you know, how to get access to actually waste material or inert waste material that we use for dam construction, which is another kind of more interesting part of this whole mining sequence.

Okay. All right. Thank you.

Please state your name and company. Please go ahead.

Hi, it's Adrian here at ABG. A couple of questions from my end. First of all, a follow-up on the Gerpenberg permit. I guess how confident are you that the increased permit will be in place at the start of 2025? Is there a high uncertainty of you not getting it?

It will not be in place in the beginning of 2025, but it's enough that it comes in place during 2025 that we can produce 2025. So we will most likely assume that it's going to happen in 2025 and produce without any limitations in the beginning of the year. And if it doesn't come during 2025, we will have a relatively slow second half of the year. That's the reality of how things will work out. How confident? We feel good about it, but it's impossible to put any number on those things.

Okay, I understand. And then also follow up on the TC benchmarks. I mean, we're seeing some reports that TC terms could be as low as sort of $20 to $30 per ton for the copper benchmark for next year. Would you say that this is roughly in line with sort of what you are hearing as well?

I care not to speculate about that. We are not at the table and the numbers that come out can have all kind of implication for negotiation tactics and other things at those tables. So I care not to speculate until we get the numbers out.

Okay, I understand. And just a final housekeeping question. The 935 million in insurance income that will be booked in Q4, Do you have a timeline for when that will be paid out?

As of today, we don't have a timeline. We received the confirmation of the amount just a couple of days back, and the next step is to sit down and schedule the payment plan. I don't expect much of an impact on this year, but we'll come back to the outlook of the totality for next year.

Okay, perfect. That was all for me, so thank you.

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

Thank you very much for the presentation. A few questions left from my side. First on the ODA expansion, with regards to the commissioning delay that you've indicated for the project, what sort of earnings contribution shall we expect for 2025? I think at the full run rate and using commodity price inputs as of September, you were indicating that 150 million euros at the full run rate is still

right number shall we assume half of that for the full year of 25 or more or less any indication would be very helpful thank you i'm really taking this on the top of my head but the number for the full year effect is still true it hasn't changed exactly how much you know exactly what the ramp up curve will be uh it's still a bit unclear so i clear not to speculate exactly on that but but the kind of full year effect is still the one that we have indicated

Understood. Thank you. Second question on LAVR. You have submitted an application for a mining concession. When do you expect a decision here? And assuming the outcome is positive, how long could the entire permitting process take before you can actually break ground for this project?

That's an interesting question that has many potential outcomes. I think that if I were to guess, when we're speaking in 12 months, we will have a mining concession. This is both that we will get the mining concession and a rough indication of the timing. It could take another 12 months from now. It could take less, it could take more. We are not in control of the process. It's, as you know, a new law in Sweden. It's the first time that that new law is applied, so we'll see what it will entail. Once we're there, things get a little bit interesting, because with the new Critical Raw Material Act, I think it's highly likely that LAVA could qualify as a strategic project, although that needs to be confirmed. And if it were to be so, you could say that the environmental permitting process should not take more than 27 months. Now if this is really true and whether it's really in there and whether it moves that fast, who knows. But I think that three years is maybe a more prudent way of looking at it, i.e. the kind of first time we could have an environmental permit in reality will be then late 28. I think that that's still kind of optimistic and then We're probably not ready to move right ahead. We will probably need some discussion. So I said otherwise, I think it's very unlikely that we will have much of construction in the next five years. And then from start of construction is probably three years until we have anything mining, anything mined.

Very clear. Thank you for that. And just lastly on Gartenberg, shall we think that the Q3 run rate of 3.7, 3.8 million tons is something you can sustain, assuming you get the permit? Or could you even move a bit higher than that level without any incremental investments?

Well, I think that the first point is true. It's obvious that we should be able to do a little bit more than 3.5 with the just existing things. We're of course then also always looking at potential de-bottlenecking around Garpenberg, and we'll see what we'll come out with as a next step once we hopefully have this permit in place. But we're not going to spend any money on any kind of investments for de-bottlenecking until we have the permit in place, so we're not risking investments in vain. Thanks very much.

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

Yeah, hi, gents. I had a couple of questions. I suppose the first one was on Kvitsa and the mine plan revisions. Can you just talk us through the dynamics here and why the mine plan is taking so long to reassess? I mean, I remember in Q3 last year, you said there was no mine plan for 2025. So yeah, just interested to find out what's going on there. Thanks.

Just to take it through again. First of all, as you will recall from the R&R statement update that we did in February, there was quite a lot of big degrade from ore reserve to resource. That was linked to dam and dam issues and dam construction issues and the assessment of the likelihood to get a dam permit on that dam plan that was in place at that time. We now have another dam plan in place that we think is going to get permitted, which is good news. But it will require quite some material to get the dam in place. Most of that material hopefully coming internally, not having to buy it externally. That could impact the plan, the mining plan. Then the second thing that's impacting a plan in Kivica is the fact that the slope angle and other things related to slope angle are a little bit tricky as we've had some problems with certain wedges in the pit and that needs to be taken care of. The third thing that is very tricky and complicated in Kivica is it's not as itic, just to be clear. It's not as itic where you have a very kind of evenly, slowly changing kind of grade in different parts of the area. The ore in Kevitz is very concentrated in certain particular places. When to get that and how to access that, which means that the way that you choose to do a plan actually makes a big difference to to the grade in the grade profile for different years, and not for the totality because the totality is relatively safe, but for different years. And all these things play together. And that, just to be very clear, what is happening now is that we have decided not to say anything until we have the full revised R&R statement ready, which typically gets ready in the early part of the year and is released to you guys in February. Maybe we'll consider releasing it earlier in Kevitsa. Normally the revised RNR statement doesn't really affect the first year grades because they are in some way kind of fixed or not so much ado about. So the first year is finished earlier and we could then at this particular time guide for the grades even though it's before the RNR statement is ready. In Kevitsa that's not the case. We have had there are too many things that needs to be settled before we can communicate it and it does and it the certain choices does have an effect on the grades 425. okay very clear um and then as a follow-up can i ask on

I have a question about capex, where the spend rate in Q3 went down. It means you have to spend about $5.1 billion in Q4 to meet the guidance. That's going to be the highest on record. Is that realistic, or should we expect some capex to drift into 2025?

I think you're a little bit stating the obvious, that there is a risk or chance, however you want to look at it, that something will drift. There is quite a big chunk that is coming into Q4, so we might see record levels, but whether we're going to get everything in that we have in our plans, something might be drifting over to next year.

And then last one was just on working capital. Slightly surprising size of the build. Have you got any expectations for what we should have seen for Q4, please?

Q4 typically is our strongest quarter when it comes to working capital. We've had a fairly high bill this quarter, but clearly less than what we typically have in Q2. So I expect Q4 to be roughly a normal Q4, which is a working capital release. I don't want to give a number because it's price related and all that, but it should be a release. Then if you're simulating the working capital specifically, we will, booking the insurance incomes, we will also get a 935 million Swedish kronor receivable affecting the working capital for Q4. But excluding that, we should see a release. Got it.

Thank you very much.

The next question comes from Marina Calero from RBC Capital Markets. Please go ahead.

Good morning. Thanks for the call. I just have a follow-up question on Kivica. You mentioned the importance of an equal price for the pushback five decision. Can you maybe give us a range of what sort of equal prices you will need for that investment to meet your hurdle rate?

No, I will not, but just to get a little bit of shedding light, I mean, the question for Kivitz at Pushback 5 is the price of metals in general between 2035 and 2045, because that's the kind of extension we're talking about, for those 10 years. And it's about the nickel price, which is important, but it's also about copper and PGM and gold. And that whole totality needs to work out. As you probably understood, because we haven't made a decision yet, it's not that if one used a kind of sports term that this is a slam dunk. There are lots of issues in and out and ifs and buts around this. And one also given the kind of general uncertainty always with metal prices, but especially so far in advance, the further we can kind of extend this option that we can make a decision later without destroying any value in the way we're doing it is, of course, also creating value.

Thank you very much.

The next question comes from Richard Hatch from Burenberg. Please go ahead.

Yeah, thanks very much for the call. Just a couple of follow-ups or just final points. Just on TARA's throughput for 25, can you give us a steer as to what kind of volumes you think is sensible to put into our numbers?

First one, please. 1.8 million tons of throughput at 5.5% zinc.

Great. Okay. Very helpful. Very clear. Thanks. The second one is just, I mean, you've effectively pointed to it, but just for leading grades, Q4, on my numbers, it looks like you're going to have to do about 1.5 grams gold grade to get to the 2.3 guidance. Is that correct, or do you think there's upside to that?

No, I think you've done the math right. I will not question your math.

Okay, cool. Thank you. Many do. And the last one is just on Garpenberg, you're talking about the expansion. Can you just talk about the TSF capacity you've got at site, just in terms of the, if that's a challenge or not at all?

The existing tailings facility at the existing production levels is good until about 2034, 5, something like that. That's one of the considerations of kind of only asking for 4.5 is that that still is kind of doable It will shorten the life of mine if you were to go to 4.5. It will shorten the life of mine of the existing tailings facility, but it's still doable to deposit, which is of course very important for getting the permit to be allowed to produce that you can show that if you were to produce on that level that you can actually handle the tailings. At some stage, there will be needed a new or extended or widened tailings facility that is worked as ongoing. We are not nervous in a sense, but it's, of course, always kind of interesting where you're going to get a new tailings facility in place. And that will be the subject of a later permit, and that will be a new permit starting from scratch.

Okay. Got you. All right. Thanks for your time.

The next question comes from Daniel Major from UBS. Please go ahead.

Hi. Yeah, thanks for the questions. Two from me. First one, just perhaps a clarification on the couple of bridge items into Q4. Can you just confirm how much out of the insurance provision you've received as cash? Is it 800 million? I think it was 600 and 200. Is that correct?

Exactly. The guidance that we gave holds. So we received 800 so far and we have 200 that we're expecting for Q4 as a payment. And on the P&L side, we're expecting 935 as an income in the P&L of Q4.

Okay, thanks. And then the second one, looking at your group quarterly bridge, 591 million benefit this quarter from in the cost line. How much of that is seasonality?

We've typically said that it's 200. When I looked into the detail numbers, I would probably round that up a bit. So I'd say 230 to 220 to 230 is probably a correct number. But if you want to round it to even hundreds, then I'd say 200.

Okay, and would you expect the remainder of that to be sustained in terms of that cost benefit into Q4?

Q4 is... I mean, the main part of the rest is that we don't have maintenance. So that should be sustained until next summer. But having said that, Q4 is typically our most expensive quarter. So if you compare Q4 to the cost of any other quarter, it will be fairly high. So I would be quite conservative in the modeling for Q4 specifically. Even though I cannot point on any single item here that is not sustainable.

Okay, thanks. And then last one, just to follow up on Liam's question around M&A. You normally focus on gearing where you're 24%, I suppose, above your target, but your net net DBDA is still quite low, less than one times. If M&A were an option, can you give us any sense of how high you'd be willing to go in terms of leverage for cash-funded M&A and whether equity would still be an option?

I will answer that question in very general terms. And I think we said this many times before. We are extremely uneasy with ever going over 60% gearing. We simulate a lot of what low turns look like and what really bad turns look like and what we then can afford. We can be north of 20 because we don't really go from 20 to 60 in a normal kind of downturn. A normal downturn will be less than that, but exactly how big it is will depend. We are very comfortable with the present 24, and that could probably be north of that. I was sometimes given the number that when we bought Kivica, I think it was 40 around there, and we were confident around 40 to do that acquisition. Somewhere north of that, equity will start playing.

Okay, so 40% would really be what you'd be comfortable going up to on the debt side. Is that right?

It all depends. It depends also what the simulations work out on. But we have proven to be comfortable with 40 once before.

But just to underline what Michael says, we spend a lot of time simulating. If we do a big investment of any kind, what would it look if we had a severe downturn immediately after that? And we want to meet our limits where we feel comfortable even in a severe downturn. So that's how we work it.

And you're also pointing to Roby's walk, and it also depends what other CAPEX we have that might be non-M&A related CAPEX as well placed into all these simulations.

Okay. Very clear. Thanks.

As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. The next question comes from Liam Fitzpatrick from Deutsche Bank. Please go ahead.

Good morning. Second round here. I just wanted to follow up on ITIC because I've also had some questions from investors on this. I'm still a little bit confused about why the grade is going down year over year, given that the Lickavara higher grade pit is ramping up. Is this just a short term thing? or access issues is the mine plan not panning out exactly as you thought and any color of that would be helpful.

This is fully an or access issue around where the other warrants are. And then I've told some other people who question why is it 0.16 that, you know, if you put out your ruler and look very closely into what was given at the capital markets day, you can probably figure out that the best case or the expected case was 0.16 for 25. It depends on how sharp eyes you have. But we were, of course, blurry because we didn't know. But I can say that point 16 is exactly according to what we thought internally all the time. And it is due to the fact, not so much Likavara, because Likavara was always planned to be full and is also planned to be full now for next year. But it's the other positions in the mine that we have, especially on the south side where we are not really into. And also on the new north seven where we are not into high grades yet. We need to come down a few benches before we can start hitting higher grades.

Okay, thank you.

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

Guys, thanks for the follow-up. Just another question on ITIC. Do you think you need to spend more capex to deliver 45 million tons consistently at some stage?

That is not our plan because I think that it's doable without any major capex. The mill is clearly ready for it. The bottleneck has been the mine. And then somebody says, okay, what if you were to just put in a few more trucks and then it's all solved? It's not quite that easy. It has to do with availability of phases and availability of other equipment as well. And that has proven to be a problem over time. And to me, it's not really a capex issue.

I agree with what you say, Michael. And just one addition. We have, for next year already, guided for higher maintenance capex in ITIC. And that plays a part in that. But that's already in the numbers we've communicated.

Okay. And so do you think it's reasonable to assume 45 for next year? Or is it somewhere between...

2024 levels and 45 more I would I would say that that's more reasonable yes okay cool all right thank you there are no more questions at this time so I hand the conference back to the speakers for any closing comments

Thank you, operator. I just wanted to thank all of you for bearing with us during this conference. I hope that you've gotten a little bit better sense of what I think has been a very good quarter and also quite good forward outlooking statements as well, albeit be it with a little bit of a hinge to Q4. Thank you all.