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 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 Garpen Bay actually for the second quarter in a row. This has now gotten so well and so well underwhelming in Garpen Bay that it's actually now the environmental permit that is our limiting factor for production in Garpen Bay. 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 ITEK project is very near to completion. There's very little that's left and it looks very good and we're having the last inspections there. We're very confident that we will reach the full functionality that we wanted to get from the dam in ITEK. The project in Kristne Bay Rebliden 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 to tell, but so far so good both in the tank house project in Rundsjär and in the Pace project in the Bulliden 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 in during the quarter we have submitted an application for a mining concession in the in lava 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 fifteen and a half billion krona. On the key projects just an update on the other expansion we will already during Q1 next year be able to go back up to 200 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 roster full speed and be able to get that but the one that is time limiting is the the new roster 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 roster in place. The IT reinforcement is moving on as I said before very nicely it's planned to be completed in the end of this year and it looks very very good there are only very small minor things left and then the the final inspections on the quality of the new dam the Christenberg expansion as I said we are already doing some production from the revenue and deposit however through the old infrastructure the new infrastructure is on is online to get commissioned late Q1 early Q2 next year. The tank house as I said very early days so far the ground work 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 the bullion area extension with the with the pace project and the tailings management the ground worker has started there as well and there's also moving on nicely and the tarra reopening we have all the people back and on boarded again and we have gotten all the kind of paperwork done 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 CO2 emissions are up compared to last year this is actually according to budget as it 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 we come back on the positive trend that we had for such a long time. The sick leave is very stable on the level which we consider too high we wanted to get down to the levels that we had pre-COVID which was around four percent but we seem to have difficulties coming down all the way down there this is not unique to us it's 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 well 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 all-time high and it's of course improving versus both periods that we're looking at. The spot TC's 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 has an effect 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 cost 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 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 price have come up a little bit and is now safely above the cost curve and then you can see nickel where the 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 Bully then look at our production the ITG 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 lika bar is coming although a little bit slow but it's still coming the grade right around where we have guided it to be. Garpen Bay record mill volume it's been a very good production quarter grades around where they should be. Kivitsa two and a half million tons a little bit less than last year but you know that the permit in Kivitsa is 10 million tons so two and a half is right on the permit level even though you can play between different quarters. Sustainable production around this capacity and grades around where they should be clearly stronger than last year's low low grades. The Bulliden area is the very strong performer this quarter with a very strong production we have record for gold production coming out of the Kankper mine in general and very strong grades and throughput coming out of out of the Bulliden 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 Rundsjär 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 the place like Rundsjär without a tank house. Harjavalta very strong production strong cathode production around this and basically generate 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. Alda has had some challenges partially it's due to the tank house forward 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 but it says 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 and nickel production is also very strong. With that I 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 a EBIT result excluding process inventory of 2,999 so just shy of three billion. This is an improvement of about one 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 percent 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 two 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 three 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 it's stronger mill production so strong quarter of mines but also an improvement on the smelting side. And there we highlight in particular the performance of the Finnish smelters Kokkola and Harjevälte that 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 cost 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 Rönnöshö 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 ITX some costs connected to the likavaru startup and in Oda as well but in general mostly a cost movement related to volumes. Moving on to a sequential comparison with Q2 this year as you can see the the impact from prices and terms is very limited 83 million so small change there we've had slightly lower metal prices but slightly higher byproduct prices but again small movements. Volumes up 560 millions 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 again a bull in an 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 would 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 plan and then some 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've 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 percent 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 order we're going show off the brand new smelter to you all guys it is the actual the actual capital market information will happen in Bergen and then we will make the excursion to Oda 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 Bulliden and get that in place it's getting to be full relatively quickly so if you especially if you want to go to the Oda 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 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 one 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 lots of things in and out with an insurance and we're not done with that information 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 do 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 bullion 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 it was basically no grades left for Q4 as it's been so strong grades actually throughout the year in the bullion area we will though have relatively weak if you make the math here even though we have we are guiding up the the grade we will have a relatively weak Q4 regarding grades in the bullion area as we will have to mind the weaker areas as well that we haven't mined so much during the earlier part of the year we should also say regarding Garpen Bay and I pointed that out that now the the environmental permit is now the bottleneck the environmental permit is three and a half million ton 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 the the permit in Garpen Bay so 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 that in during the end of this year and to get that permit during next year so that next year the three and a half should not be the bottleneck however you can ever be sure either on the result of such a test or on the exact timing of it but right now three and a half 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 what has been guided before Garpen Bay is coming along but that's 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 bullion area you can say it's not really that much changes bullion areas should be no no question in Kiewica we have not guided yet and that's because we are doing a review of the the plans in Kiewica both related to dam construction and how the dam construction play in what kind of parts we have we also with some geological information and 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 we will keep the option live further out all this is a relatively big 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 all of

yes ladies and gentlemen that opens up our q a session here in Stockholm and we will start with Johannes Grunselius the norske bank please

thank you it's Johannes Grunselius here dnb can i start off by asking you about the grade guidance 25 it's point 16 i was more under the impression that 24 would be the low point year and then you have lika vara which is the blend of is it one fifth which comes with rich or so can you elaborate a bit on that and you also mentioned that this is the last year with low grades in it 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 it starts a little bit of a pickup i have no further guidance up on top of that and 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 point 23 of course at some stage we'll come back not just to 23 but also above 23

and a second question on on on the ore if you can give us any sort of color what do you think about 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 is at 45 you're absolutely right and we have this here this quarter you 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 lika where it should be behind us that is helping on on the amount of tons so it should be coming up but you're absolutely right we've had we've been struggling to reach a 45 and a constant consistent way even though we've had 45 at quarters thank

you ola södermark kepler sevria

yes good morning just to follow up on it is it possible to quantify the i mean the impact of of ramping up lika vara and also the construction of the improved dam facilities to have there i assume it has impacted total volume of the mine

um yes but the 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 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 the end of the the the dam project on the margin be positive also for the mine production

and a follow-up on the garpenberry 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 it is an alternation of the existing permit which is good in terms of timing what we can 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 which is out there our ambition is to get the actual application in within the next few weeks clearly within this quarter then we think that we will get a permit and we think we're going to get it at four and a half million but you never know and we think we're going to get it during the next year so that it will not be limiting factor for for 2025 but we can ever be 100 percent sure until we get it thank you

christian kopfer handersbank and please

right thank you very much couple questions follow up on olas question on garpenberg on the new permit probably during next year what kind of what kind of investments are we talking about is it i guess it's primarily the bottle like in capex or

now just to be very clear we are applying for a bigger for a bigger permit to make sure that three and a half is not a bottleneck for us and and the number four and a half is picked in the sense that that's a number which is big enough so it should not be really be 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 those are the 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 three point six or three point seven with the existing infrastructure that we have that's what we've proven this year i mean without any without any limits we should probably have three point six for the year so that's more 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

yeah 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 you know another line in the in the middle or how does most

likely the middle can be done by the bottlenecking but the big problem is the shaft and how to get the ore up that's that's the 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 garton bay anyway even for the same production at some stage because with the mine that they're 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 ontara how so so let's just assume that everything looks i mean the byproduct of taura is led right yes basically yeah all right so if you assume current lead price what kind of c1 cash cost do you think tarot will be 20 25 a

dollar one

dollar one

dollar 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 denorske bank to

take another question could you give some color on what you see in pricing for 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 on your annual contracts that's more in the second quarter next year right

well i mean the the contracts are for copper negotiated typically in november and then you know good as of as of january one the the annual benchmark contracts the on the zinc side are typically negotiated in in february and march but then retroactively effective as of january one then we always have some inventory typically a month or six weeks or so on that is priced that is delivered before the end of the year and thus according to the previous years benchmark that we will then you that we will then consume during the first half of the first quarter both for copper and for zinc so that's that's the way the mechanics work out

and what did you see in the spot market in in europe was that a major weakness or was it more stability

now that the spot market in terms of tcs is a global market and and there those tcs are very low very very low spot tcs how that will play into the benchmark negotiations i don't know it's it's we're not part of that and what is more european locally are the premiums and the premiums are on a stable relatively low label level but as hawkhan pointed out compared to last year they are lower with they're they're not moving that much in terms of the premiums will be my guess right now and then we have the byproducts are also relatively stable on a bit 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 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 liam fitzpatrick from deutsch bank please go ahead

good morning two questions for me the first one on kvitzer and then second on on m&a on kvitzer i appreciate the review is 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 you know versus this year or versus reserve grade and then can you give any high 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 you know opportunistic acquisitions or are you very much focused on 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 you know 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 when things show up we will be looking and beyond that i have no other comments regarding kivitsa kivitsa we are hoping to get either late this year or early next year to come out with with the the revised plan just to be very clear around that there are there quite a few moving parts those of you who read the rnr statement last year know that we had to take about five years out of the out of the reserves and put them into resources because of a dam dam permit issue and dam construction issue that we had in kivitsa that 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 we need 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 is 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 not speculate on the other parts around you know how much would it be and when would it be possible to get a pushback five in the next few months and then we have to wait for the next year to 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 in those options another thing is also to get access to some material you know how to get access to to actually waste material or inert waste material that be used 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 questions from from my end first of all a follow-up on the Garpenberry permit I guess how confident are you that the increased permit will be in place at the start of 2025 is there a 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 to 2025 and produce without any limitations in the 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 that's the reality of how will work out how confident we feel good about it but you know there's it's impossible to put any number on those things

okay I understand and then also a 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 dollars per ton for the copper benchmark for next year would you say that this is roughly in line with 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 not to speculate until we get the numbers out

okay understand and just a final housekeeping question the 9.35 million in insurance income that will be booked in q4 do you have a timeline for when that will be paid out

so 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 the payment plan I don't expect much of an impact on this year but 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 you honest mazvua's from Morgan Stanley please go ahead

thank you first on the auto 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 the 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 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 and second question on lava you have submitted an application for a 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 is 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 the rough indication of the timing it could take 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 is the first time that that new law is is applied so we'll see what what they won't tail 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 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 28th I think that that's still kind of optimistic and then we're probably not ready to to move right ahead we probably need to some some discussion so I said otherwise I think there's very unlikely that we will have much of construction in the next five years and 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 sort of the q3 run rate of 3.7 3.8 million tons is something you can sustain assuming you get the the permit or could you even move a bit higher than that level without any incremental investments

I think that the first part is true it is obvious that we should be able to do a little bit more than 3.5 with the just existing things we of course and also always looking at potential the bottlenecking around garpenberg and we'll see what will come out with and as the 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 the bottlenecking until we have the permit in place so we're not risking investments in vain yeah thanks very much

the next question comes from amos fletcher from barkley's please go ahead

yeah hi gents um I had a couple of questions I suppose the first one is 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 to to take it through again and the first of all as you will recall from the rnr statement update that we did in February there was a quite a lot big degrade from or reserved to to resource that was linked to dam and dam issues and and dam construction issues and the assessment of the likelihood to get a dam permit on that dam and dam plan that was in place at that time we now have a another dam plan in place that we think is going to get permitted which is a 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 kvitsa 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 kvitsa 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 of the of the area you know that the ore in kvitsa is very concentrated in certain particular places and you know when to get that and how to access that and 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 very relatively safe but but for different years and all these things play together and and that's just to be very clear what is happening now is that we have decided not to say anything until we have the full revised rnr 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 kvitsa normally they are derived rnr statement doesn't really affect the first year grades because they are in some way kind of fixed or not so much to do about so the first year is finished earlier and we could then at this particular time guide for the for the grades even though it's before the rnr statement is ready in kvitsa that's not the case we have 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 and then as a follow-up can i ask on 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 you're 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 there is quite a big chunk that is coming into to 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 and then last time was just on working capital um slightly surprising size of the build have you got any expectations for what we should have seen for q4 please

q4 typically is a stronger squatter when it comes to to working capital we've had a fairly high build this quarter but but less than what we typically have in q2 so i expect q4 to be roughly a normal 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 done then if you're simulating the working capital specifically we will booking the the insurance incomes we will also get a 935 million swedish kronor receivable effect in the working capital for q4 but but but excluding that we should see a release got it

thank you very much that's it

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 keviza 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 be to meet your your heart of race

no i i will not but i'll just to to get a little bit of shedding light i mean question for keviza pushback five 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 to work out as you probably understood because we haven't made a decision yet is not that 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 and the we're doing it is of course also creating value

thank you very much

the next question comes from richard hatch from berenberg please go ahead

um yeah thanks um thanks very much for the call just a couple of follow-ups or or uh just final point just on tara streep for 25 can you give us a steer as to what kind of you think is sensible to to put into our numbers first one please

1.8 million tons of throughput at 5.5 5.5 percent zinc

great okay very helpful very clear thanks and the second one is just i mean you've you've effectively pointed to it but just believing grades q4 on my numbers it looks like you're going to have to do about that one and a half grams um gold grade to get to the 2.3 uh is that correct or do you think there's upside to that

no i think you've done the math right i will not i will not question your math

okay cool thank you um many do and the last one is um is just on them on garpenbergs um you're talking about the expansion can you just talk about the um tsf capacity you've got at site just in terms of the um if that's a challenge or or not at all

the the existing tailing facility at the existing production levels is good until about 20 30 four five four and something something like that um that's um one of the considerations of kind of only asking for four and a half is that that still is kind of doable it will shorten the life of mine if you were to go to four and a half it will shorten the life of mine of the existing telling 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 you if you were to produce on that level that you can actually handle the the tailings um at some stage there will be needed a new or extended or widened tailing 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 telling facility in place and that will be the subject of a later permit and that will be a new permit starting from scratch

okay gotcha all right thanks for your time

the next question comes from daniel major from ubs please go ahead

hi um yeah thanks for questions two um from me first one um just perhaps a clarification on the a couple of bridge items into q4 um 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 the guidance that we gave holds so so uh we received 800 so far and we have 200 that we're expecting for q4 as a payment and on the pnl side we're expecting 9.35 as an income in the pnl of q4

okay thanks and then just second one looking at your group quarterly bridge 591 million benefit this quarter from in the cost line how much of that is seasonality

um we've typically said that it's 200 uh when i looked into the to 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

um q4 is is um i mean the main the main part of the rest is that we don't have maintenance so sustain until next summer but having said that q4 is typically our most expensive quarter so if you compare q4 to to the cost any other quarter it will be fairly high so i would be quite conservative in the modeling for q2 q4 specifically even though i cannot point in any single single item here that is not sustainable

okay thanks um and then um last one just to follow up on liam's question around uh mna you normally focus on um gearing where you're 24 i suppose above your your target but your net dvda is still quite low less than one times um if mna were an option um can you give us any sense of how high you would be willing to go in terms of uh leverage for cash uh funded mna 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 we simulate a lot of what low turns look like and how what what really bad turns look like and and what we then can afford uh 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 uh we are very comfortable with the present 24 and that could probably be north of that i've sometimes given the number that when we bought kivitsa i think it was 40 around there and we were confident around 40 to 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 that side is that right it

all depends it depends also what the the simulations work out on but but we have proven to be comfortable 40 once before

but 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 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 that's how we work it

and and and you also pointed obvious hawk and it also depends what other capex we have that might be non non mma related capex as well plays into all these simulations

okay very clear thanks

as a reminder if you wish to ask a question please dial star five on your telephone keypad the next question comes from liam fitzpatrick from deutsch 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 liquor vara higher grade pit is is ramping up is this just a short term 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 the other warrants are and then i've told some other people who question why is it point 16 that you know if you put out your your ruler and look very closely into what was given at the capital market's day you can probably figure out that the best case or the expected case was point 16 for for 25 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 fact not not so much uh because 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 that we have especially on the south side where we are not really into and also on the on the 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 barkley's please go ahead

guys um thanks for the follow-up um just another question on itek 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 has okay what if you were to just put in a few more trucks and then then it's all solved it's not quite that easy it has to do with availability of 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

just i agree with what you say michael and just just one addition we have for next year already guided for higher maintenance capex in in itek and that that plays a part in that but that's already in the numbers we've communicated

okay and then so do you think reasonable to assume 45 for next year or is it sort of somewhere between 2024 levels and 45 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 this conference i think that you will 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