Boliden AB

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.