Boliden AB (publ)

Ladies and gentlemen, I'd like to welcome you to Boliden's Q2 2025 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 will be led by the operator. Mikael, welcome.

Thank you, Olof, and welcome to all of you out there as well. I hope you're doing fine. Let's get going and get to talking about the quarter and the core report that we have just released. If you look at the highlights, we had a profit-excluding inventory valuation of almost 1.3 billion SEK. There's been quite a lot of accounting going on in this quarter and Håkan will come back and talk a little bit about those things that are affecting plus and minus. What is clear though is that we have a negative currency effect of about 600 million compared both to last year and compared to first quarter. It happened to be the same numbers. We've also had extensive planned maintenance and this was well communicated beforehand and We were happy to be able to complete them exactly according to plan. As always, when you have major maintenance stops, you're always a little bit nervous when you cool down the processes and start looking at what you have, that you will find something more that needs to get done while you're doing things. But this year, most of the things were in the condition that we expected and we could do the needed actions as was planned. We have a stable production and a stable underlying cash flow. We'll talk more about that coming forward. We've included the two Lundin mines as of this quarter, as of April 16, to be more exact. The integration is going fine and we're moving along well there as well. This also creates some accounting issues, but Håkan will clear it all out for you as it comes in a little while. We have a record production in ITIC and we're bringing this up here because it is important It is so that regarding ore production, we are producing according to what we have guided. We are around a 40 million ton pace right now. But we have been able and we're very happy that we're so good getting the stripping done that has been a issue during the whole dam project that stripping was falling a little bit behind it's part of the issues right now that we don't really have too many alternative places to go to when things happen the fact that we get stripping going now will give us more flexibility going forward to handle issues our big projects are according planning and planning They're going on according to plan as we have presented them in the Capital Markets Day back in March. So the financial performance talked about just shy of 1.3 billion. In there, there is a real comparison issue, which is linked to the one-off cost for advisors, et cetera, linked to the acquisition and the equity rates that we did with the Lundin assets. And we had the plan maintenance at $400. million sec EBIT impact, just as it was communicated. Free cash flow, if you exclude the proceeds for the acquisition, was at 2 billion krona. We're very strong and happy about that. Almost one of it came from insurance money, but that was also well communicated beforehand and part of the project that we're doing right now. The total free cash flow, then, if you take also the acquisition amount into place, was, of course, much more negative. We're happy with the 29% gearing. This is, in our mind at least, a stronger balance sheet than we would have planned to have after the acquisition, of course, thanks to the relatively strong cash flow that we had in the quarter. CapEx is moving along according to what has been communicated. On the big projects, the ODA project, nothing really major to happen compared to what we said in March. The commissioning is ongoing and we're looking for ramp up now in the second half of the year. The Kristineberg expansion is more or less done. It was inaugurated back in May and the last pieces are coming in place as we're speaking. The Rönnsche Tankhouse, well on track. We will see the ramp up here of the second half of next year. The Aitik Dam is already completed because there's already history, but we did mention it here that we actually now have all the permits in place. When we did the Aitik Dam, we used an exception in the Swedish environmental law that you can do certain things and ask for a permit afterwards. Normally, you have to ask for the permit first. There is a little bit of a risk with this. We never thought it was very big, but of course, good now that we actually do have the permit in line with what we thought we would get. The Boliden area tailings recycling is also well underway completion in the second half of next year and also here and this one is we're also very happy with we've gotten the permits regarding this in place during this quarter so we now have all the prerequisites ready to be able to continue going forward. On the ESG side, things are also moving well forward. The greenhouse gas emission looks like it's going the wrong way, but here you have to remember that we're now including two more units into this one and that we will, of course, also we will restate our base year in the science-based target as we move forward. We had a good quarter when it comes to LTIs, so we are clearly better than last year and we're also moving our 12-month rolling average down. So we're in a good place regarding that. Also sick leave, as you know, it's been a little bit of a tough issue for us. Sick leave went up during COVID and hasn't really come down yet. But now finally we're seeing trends coming in the right direction. Let's hope that we can keep that trend in place. And it's important to understand that Swimming Corps and Zinc Ruban are included in the last quarter, but not recalculated the numbers here for historical periods. On the market side, well, lots of things have happened on the market side. As you recall, we had a a very clear dip on metal prices and currency during April. Metal prices basically recovering in the later part of the quarter, whereas the exchange rates for the dollar has continued to be weaker than we've been used to. So we see that, and if you look more on the metal side, we also see that the zinc price has been going lower, whereas the precious metals have been going higher, but the total mix for us is about zero. There is a very big push on the copper spot TCs. It doesn't affect us so much directly because we have very little on spot. Most of our copper comes on benchmark. But of course, as this very low spot TC continues into the second half of the year, it will of course have some effect on benchmark for next year. So it's a development which is clearly problematic from our point of view, and I think it's problematic for the whole industry point of view, because the levels that we see on the Theses right now is not sustainable for the industry as such, even though the miners right now have a very good time. The byproducts, including sulfuric acid prices, have been quite stable for us as well. If you look generally what's happening in the market on the cost situation, you can see here when we're looking at the different percentile development, you can see that copper, still the copper price is quite a lot above where the cost curves are. There is a shortage of copper that is already priced in into the price, but the price has been relatively stable during this latest time. You can also see here that the cost is coming down. It looks like copper miners around the world are good at taking costs out. But do remember that the high gold price is part of this and also the low copper TCs start playing in as a kind of freebie for the copper miners in lowering their costs. If you move over to the zinc side, once again, it's been for a while, the zinc price is relatively low. It also looks like zinc mines around the world are extremely good at taking out costs. Here, the high silver price is helping a lot, and also the lower zinc TCs is helping to get the cost level down. It is not so much that the mines around the world are that good at taking out costs. Looking at nickel, nickel is problematic. You can see that there are very few nickel mines in the world that make any kind of money at all. There has been a hard push to get the costs down. Here there are some real costs. Cost cutting has been going on and it's now on a level and the nickel price is on a level where it's very unsustainable for many in the industry over time. If we move over to mine production, when you look at that here, number one, just to be very clear, we have once again included Zincurvan and Somincor as they have produced during the 10 weeks of the quarter that we have owned them. We have not adjusted historical periods. Therefore, of course, zinc looks extremely strong with the profile of the new mines. Also copper gets some help from Somincor. And nickel is, of course, only Kevica that pushes it. Having said that, we've had a relatively strong production in all the mines. The ITIC is aligned with what we guided for in the 40 million pays as we can have now with the thyroid issue. Recoveries are going the right direction and better than they were in Q1. Still a little bit to go to get back to the normal levels, but we're heading in the right direction and we're getting out of this oxidized zone. In Garpenbury, the throughput is slightly lower. We've had quite a lot of maintenance in Garpenbury as well during the quarter. And we have a lower sink rate compared to last year. We're having silt pillar mining that is slower than we had anticipated. Or I should say high-grade silt pillar mining is progressing slower. We have not sterilized any of this. It's not that we have lost any of the high grades. stopes but we've had to in the short term replace the high grade stopes with some alternative stopes which have been lower grade and we're coming back a little bit to the outlook and we don't think that we're going to be able to speed up this silver mining in the very short term. Kevitz has strong production also relatively good grades. The Boliden area very stable production good grades even though they're lower than last year but last year was crazy high grades in the Boliden area. Entara, the ramp up is going on. Somincor, stable production. We've had some issues, as you all read about, the big power outage in the Iberian Peninsula. We had a separate power outage, which was more local around Somincor, that has impacted negatively, but otherwise generally moving on nicely. Zincruvan moving on nicely. They've had slightly lower grades than what they usually have and what they have in the in the R&R statement, but not really much around that. On the smelter side, also good production. Rönnskär, strong and stable production. We've managed to find absolutely the right feed for Rönnskär. We have very strong free metals coming out of Rönnskär in this quarter, partly linked to the fact that we've been producing well and we've been having a good mixture and also part to that you know as as with this free metals part of that is is linked to inventory and inventory measurement and we have done some inventory and been able to adjust uh positively according to that harry about the major maintenance stop but apart from that also good production around that around that solid production coccola major maintenance stop a good production around that and also very well planned beforehand. We managed to get inventories of semi-products within the system so that we could run the areas that were not having maintenance in a good way. So very strong performance there. In Odda, we're moving in the right direction in terms of getting up to the 200, as you know, from 160 to 200. That is progressing well, although we did have a unplanned maintenance situation around that, but otherwise well around that. And as we come into the fall, we'll start looking at the 350 level. Also, Bergse, small, but has a strong production in this quarter. So with that, financial summary. Håkan, please.

Thank you Mikael and good morning. Well as you have seen we have reported an EBIT result excluding process inventories just shy of 1.3 billion in a quarter that has been characterized by production at or above expectation in most units. lower prices significantly lower prices in particular dollar and then as usual in the summer months or summer quarters high planned maintenance. This is down compared to last year but then bear in mind though that last year had 2.4 billion insurance income included in the results. Capital expenditure is at 4.2 billion which is an increase compared to both comparison periods but fully in line with our full year guidance. Free cash flow, a number that we're quite happy with, 2 billion, excluding then the cost of the acquisition of Sommelkorn and Sinkgruvan. And that is an improvement compared to both comparison quarters. I'll come back to that in a while. Looking at the result by business area, mines delivered just about 1 billion, relatively stable compared to the comparisons. Smelters, a really strong quarter at 600 millions, close to 600 millions. And this is in a quarter where we have the full quarterly impact of the lower treatment charges. high planned maintenance. So I think this is a sign of strength from the smelting division. Obviously, it's lower than last year when we had the one-off in the form of insurance income in the income statement. Other elimination then, that's mainly the internal profit elimination that we do, which is a timing adjustment connected to revenue recognition. That is a negative 300 million. In there, there is about 100 million that is an internal profit elimination connected to the new mines, Somincor and Sinkruvan, which are now classified as internal feed. Going in a bit more into detail about the changes between quarters, there have been quite a few moving parts. Year on year, if you put everything together, the development of prices and terms is actually flat. We have a significant negative impact from the US dollar, about 600 million. treatment charges negative about 300 million. But then compared to last year, we have a good development of metal prices and in particular than precious metals, which improved by about 700 million. And then we also had a good run on byproducts. Volumes are up by a bit more than one billion, and that's primarily the acquired units. On top of that, we have a negative impact from internal profit eliminations. This year it was negative, last year it was positive, so that makes a fairly big difference here in this line. Costs are up again due to Sommelkorn and Zinkgruvan being consolidated and also due to the ramp up of the Tara mine. We also had a bit more maintenance costs in smelters compared to last year. Depreciation up 700 million. Here, the new units account for almost 500 million. But we also have increases in TARA, ODDA and ITIC as a result of recent investments and the ramp up of TARA. Odda, just putting some numbers on that. Last year we were running at 50 million Swedish krona per quarter depreciation. This quarter we are running at 100 million. But as the project is fully commissioned, the GZO expansion project is fully commissioned, I expect that number to come up further to about 275 million. ish per quarter. And then of course I've commented on the items affecting comparability and that's included in this comparison as well of course. Looking at quarter per quarter, here we see a significant price reduction. Again, dollar is the main part, roughly 650 million negative. Treatment charges going from half of the impact in Q1 to full impact in Q2, that makes up about 150 million. And then metals all put together is about 100 negative. There we have a fairly big impact from definitive pricing of volumes that were preliminary priced at the last quarter end. So we had a negative impact of about 300 million from that. But then that was largely countered by a good development on precious metals, which contributed by about 250 million in this quarter compared to Q1. So all in all, a fairly big change, mainly attributable to dollar. Volumes were up. We had the impact of Sommelkorn and Zinkgruvan being consolidated. We had some negative internal profit, as I commented, but we also had a strong development of free metals in smelters. That was a mix of a number of reasons. One is the relatively favorable concentrate mix in the quarter. we've had good recoveries in production in the smelters. And then there is also a component, a positive component from the stock take where we actually had more metals than anticipated. So really strong performance in smelters in that respect. And then on the cost side, again, mostly related to the changes, mostly related to Sonicor and Syncrüvan plus a little bit more planned maintenance in smelters. And then items affecting comparability here is mainly the transaction costs for Sommelkorn and Sinkgruvan that we wrote about also in the Q1 report in the outlook. Moving over then to cash flow, we have a good cash flow here, 2 billion, if we back out the cost for the acquisition of the two new mines. We had cash flow of about 3.5 billion each from EBITDA and from working capital. And in particular, the working capital is good. It is true that we were helped in there with about 1 billion from insurance income, insurance cash flow, and also in a situation with prices coming down that automatically means that we release a little bit of working capital. But it was still well-managed inventory positions during the maintenance stops in smelters. So we're happy about that. All in all, when we look at the balance sheet and the financing, you can see the impact of the acquisitions. We have total assets coming up to 136 capital employed to close to 100 billion Swedish kronor. And also the net reclamation liability is coming up from 6 to 8%. So that's all impact from the two acquisitions, the two acquired mines. But we are really happy that we have been able to maintain a net debt to equity at below 30% this close to an acquisition. Again, that is a position of strength and we have a robust balance sheet. So I'm very happy with that. And for the outlook, I hand over again to you, Mikael.

Thank you, Håkan. Regarding the outlook, it is a relatively short and quick presentation. We are reiterating basically everything we have said before regarding CAPEX, regarding throughput and regarding grades. With one exception, we are guiding down the full year grade in for zinc, I should say, in Garpenberg from 3.3 to 3.1%. This is more in line with what we have been mining the last couple of years. There are a couple of courses, I should say. This is mainly due to that we're having some very high-grade stoves in the silt pillar mining area. As you know, silt pillar mining is always dependent on having good ground conditions and we've had issues with that and we have not been able to mine this area as fast as we had originally planned. We have not sterilized any part of this. It's all going to come out at some stage from the mine. But in the meantime, it's going slower and we have been forced to move over to other areas to cover the volume, areas that have lower grades. But apart from that, there is basically no change. Regarding the calendar, there's not much to talk about it in general. You've seen this before. There is one new item that we have not done before. We have historically guided for the next coming year in two tranches. We've done certain parts together with Q3 and certain parts together with Q4. It's been a little bit, I would say, wrong in turn, you know, compared to our internal processes, because many of the guidance actually is set in a board meeting in early December when we set formally both CapEx and also grades and production volumes and so on. And we have therefore decided to move this all together and we will do all the the communication regarding next year in one shot. The things that used to come in in Q3 like CapEx and so on and things that used to come in Q4 like the maintenance stops all in one shot coming in early December. So it's a little bit different than it has been historically. Otherwise, I think you should remember or recall all of these numbers or these dates. Should not be anything new. And with that, I'll just reiterate while we're on this planet, our purpose, our vision and our values. And with that, I'm open to take questions.

If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Marina Calero from RBC Capital Markets. Please go ahead.

Good morning. Thanks for the call. Two questions on my side. The first one on the new assets, some in core and single land. I appreciate you only report yearly financials for each of the mines, but can you give us some color on how the cash costs for the quarter are tracking for these assets compared to your full year guidance? And then my second question is on working capital. Assuming prices are where they are today, how should we think about working capital in the second half of the year?

Again, the both of you. Okay.

Well, if we look at the new assets, I think most when it comes to production is roughly in line with the full year guidance. We have provided also an EBITDA outlook of 350 million US per year as a five-year average. at consensus prices, and current prices are a bit lower than that, having an impact roughly of 150 million Swedish kronor. So we are a bit lower than our long-term outlook due to prices, in particular the dollar, but production has started roughly in line with our expectations. Mikael indicated that we had some impact from power shortages and from slightly lower grade than usual in Zinkgruvan, but it's still a fairly limited impact. So the guidance is still solid. Working capital, we released this quarter 3.5 billion. In there, there are a couple of things that I'm not expecting necessarily to repeat. One is the insurance income. We have 1 billion this quarter. I expect 300. So that's a reduction of 700. And then we were helped a bit by the reduction of prices, which hopefully will not happen in Q3. So it will be It will be a substantially lower number, but I still think that we should not tie too much more working capital. So my best estimate for the working capital development is flat, roughly, compared to where we stand right now.

Thank you very much.

The next question comes from Adrian Jelani from ABG Sundal Collier. Please go ahead.

Yes, hello, good morning. My first question is what really was the issue here with GARP and Bergen that caused you to lower the grade guidance? And I guess what has changed in the mine plan compared to your assumption from before?

As I said, this is regarding the Silk Pillar mining that has been going on for quite some time. And for those of you who don't know what Silk Pillar is, that is that we have mined in one area and we have mined below. And there's a piece in between these two areas that was left in earlier time. And now we're doing this... this intermediary level. And because it's mined both below and above, it has some specially built in challenges regarding rock stability in these areas. And we have not been able to mine this area as quickly as we would have liked to. And it is a high grade area. We have alternative stoves to go to. alternative positions, but they are at lower grade. It is possible when you run into problems that you might sterilize a mine, i.e. that you run into rock mechanical problems, which means that you can never mine there. But that's not the issue for us. We're still in an area where we're going to get all that zinc out of the Garpenbjerg mine. It's just going to take a longer time.

Okay, understood. And then in ITEC, should we expect any notable improvements in the recoveries for the second half of the year? Because I think you mentioned in passing that you're sort of starting to move out of this problematic zone that you're in.

Yes, recovery should go up in the second half of the year as we move out of the oxidized zone. So yes, and you can see there's already been quite an improvement from Q1 to Q2, even though we're still below historical levels, but we should be able in the second half, if not quite at historical level, at least get quite a bit closer to historical levels.

Okay, I understand. Finally, just a housekeeping question. Can you remind us how much of the insurance cash flow is left when that will come?

Well, let's see if I can do that. It should be, I'm looking at Olof here to do it, but we should have about 350 million per quarter in Q3 and Q4. And then there's about 300 million left for next year. So about a billion left, right? Correct.

Thank you.

The next question comes from Liam Fitzpatrick from Deutsche Bank.

Please go ahead.

Good morning. One question on Garfenberg and then another one on ITIC. On Garfenberg, can you just give us an update on the permitting process and the timing there? And in relation to this ground issue that you're encountering at the moment, is this just short-term or could this persist into 2026? And then on ITIC, you're sounding more confident just in terms of the amount of material that you're moving and completing the tailings, Dan. Are you still of the view that you're going to remain some way below the 45 million ton nameplate for the next few years? Or could there be, you know, upside to that in terms of getting up to 45 million tons within, say, the next one to two years? Thank you.

If we start with the last one, we haven't guided for anything beyond this year. It's true that we've hinted that it might not jump right away, but we'll come back with the guidance regarding next year. It is mainly not about the mine as such, it's more about the mill and how the pebble crushing that we need to increase in order to handle the diorite situation. how quickly that one is moving on. So I'll leave you with that. Then you had Garpenberg permits. We are moving on and we hope to get a permit for the increased level to four and a half million before the end of the year. We are not sure that we will get it, but we're still hopeful that that will happen. We are relatively sure that we will get the permit, but it's a timing that is a little bit unclear. And then the issues on the mining in Garpenberg. Garpenberg is a big mine with many different areas, and we do silt pillar mining in other areas as well. But this one is a little bit more sensitive to the outside because it's such a high-grade area, and therefore it shows. Otherwise, when we're doing silt pillar mining and it goes slower than we thought, you won't notice as we go somewhere else. But yes, there are always those kind of issues, but you should maybe not see them normally. It's because we're having so high grades in that particular area.

And so is it just an impact on 2025 or could it extend into 2026?

Well, I mean, there are two different answers to that one. Number one is that, of course, what's happening in 25 is actually improving 26 because we're saving some high-grade areas till next year. That doesn't necessarily, I need to be very clear about that, doesn't necessarily mean that the grades will go up because you know that we're on a grade decline over time as we are mining above the average of the reserve. But of course, this is helping. And then comes the question whether next year, where we have other silver mining, whether that will be affected by this thing being slowed down. This should also be viewed in light of that we hopefully will mine much more next year, given that we hope that we get a permit to mine at a higher level. Those are all things that will come back to us. We start guiding and we come to December.

Okay, thank you.

The next question comes from Krishan Ugawal from Citigroup.

Please go ahead.

Hi, thanks a lot for taking my question. A quick follow-up on the working capital. So, Hukan mentioned that working capital flat is kind of a good assumption for the second half. And then you're also saying $700 million will be insurance claim into that. So is it fair to assume that underlying business will have a slight model working capital build and hence full year probably may also be a flat working capital development excluding the insurance?

Well, typically what we have is, if I talk about the general development of working capital, we typically have a fairly stable level in Q3, and then we release in Q4. I expect that to be true this year as well. Everything related to working capital for Synchrovenous Summon Core is already in, so that is not a change. There will be some working capital build in Odda once Odda is ramped up. being a sink smelter it's still on fairly modest level compared to the inventory bill you see in a copper smelter so let's say half a billion or something like that that is the magnitude we're talking about so i still think that the overall picture holds you know flat q3 and then some release in q4 okay that's that's very clear and then a question on you know pre-metals

So the free metal recovery you are attributing to a bit of an inventory adjustment and higher pricing. Should we read this in a way that at current gold and silver pricing, free metal recovery can stay significantly higher for 2025 and 2026?

I'm not sure I got the question right. Did you get the question?

No, not sure. Did you ask about whether the current level of free metals is sustainable? Yes. We talked about some one-offs, and I think that accounts to about 100 million. But apart from that, I mean, it is sustainable. And in particular, once we get to the point where we're ramping up the new tank house in Rönnskär, which will happen next year, we should see a substantial improvement. We've been talking about roughly a billion per year previously. With current gold prices, it might even be more than that.

Yes, that's very clear. And my last question is on the UR into the ramp-up phase. How should we think about any kind of an earning contribution in Q3 and Q4?

For Q3, there will be a relatively limited contribution. For Q4, we should see contributions from Q4. Yes, exactly how much, I don't know if we have guided for, but there will be clearly contributions coming in.

Understood. Thanks a lot.

Thank you. The next question comes from Amos Fletcher from Barclays.

Please go ahead.

Good morning, gentlemen. A couple of questions. First question was about Tara, where production actually went down quarter on quarter when the mine's supposed to be ramping up. Just wondering what happened there. And then secondly, on the Lundin assets, can you just give us a feel for the EBIT contribution in the second quarter so we can get a sense of what the Q3 delta will be from a full quarter of ownership? Thanks very much.

On the second one, I don't think we're going to guide you much more than what Håkan just said, that the number that we have given of $300 to $350 per year, we're looking a little bit south of that right now because price and terms are slightly lower than what they were when we looked at this in the fall and guided for this. And then, of course, you have to make the correction from having 10 weeks going up to 13 weeks, of course, is something around that. I don't think we can really say much more. Regarding Tara, it's true that you're seeing that production actually went down. It's always when you start up things like this, we had... a little bit of a free go in the beginning, because we had ore that was easily muckable. Then we came into a situation that you have to develop every stope that you're then going to muck later, and the developments have been slightly slower, coming up to speed. In all in all, this should not change the guidance for the whole year, but there's been a little bit of that. We've been slow at getting the new development up to the real pace, and that's what has hindered us during Q2.

Maybe just one additional comment on the Lundin assets. We have mainly talked about EBTA in our guidance and in our follow-up. But as a part of the accounting here of the acquired units, we do not have any goodwill or any assets that are never depreciated. So we're depreciating the full acquisition price over time. And in this quarter, we had close to 500 million Swedish in depreciation. And that, of course, has an impact on the level of the EBIT contribution. EBITDA is then, as we said, roughly 150 million Swedish krona away from what we have seen in our business case and what we're guided for externally.

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

Good morning, gentlemen. Thank you very much for the presentation. Just a few questions left from my side. The first on the odour smelter, you talked about some earnings contribution from Q4 this year, but can you remind us which quarter do you actually expect to get the full contribution during 2026? And then can you remind us what's the annual depreciation charge once the asset is fully commissioned?

Regarding the full impact, we should see quite a lot of the full impact starting relatively early in 2026. Regarding depreciations,

Yeah, well, the full impact should be about 275 million Swedish krona per quarter. And then when I say full impact, that's the full depreciation of the ODA site. Out of that 50 million per quarter Swedish was the run rate before the expansion. So a little bit more than 200 extra million Swedish krona per quarter is what we're looking at.

Very clear. Thank you. Second question on the copper treatment charges. Michael, you mentioned that the depressed disease we've seen are problematic for the smelting industry. But are we at a pain point that we're going to see some curtailments across the industry or a contribution from gold and sulfuric acid or keeping margins just about manageable, which seems to be the case as curtailments so far haven't been as prominent as someone would have expected? And also related to that, do you think it's plausible we could see a negative benchmark for 2026?

Regarding curtailments, Johannes, I think you're much better than me to see what's happening in the rest of the industry. You're right that we don't see the curtailments, and you could argue what, because I'm pretty sure that there are some smelters out there who are running at negative cash margins at these prices and terms, but might not be willing, as of yet at least, to take the downtime. That's also expensive if you run a smelter. But it's clearly so that the low TECs, even though they are partially compensated by the high gold price and partially compensated by a healthy sulfuric acid price, is still on an unsustainable level. Regarding TECs benchmarks going forward, that's an interesting one. I don't really want to speculate because We are not part of the table and we are just a price taker on those TC discussions. But you're not the first one who are mentioning the possibility of negative full-year TCs for next year. We will see what happens in the fall.

Thanks for that. And maybe just the last one on the guidance that you will release in December. You mentioned it's going to be harmonized across the assets. Out of curiosity, are you looking to stick with the traditional Bolidian format or potentially shift to a format of providing asset level guidance on contained or payable metal for the mines?

Let's keep that for December, Ioannis.

Very well. Thanks so much. The next question comes from Paul Kurgenhoffs from Bank of America. Please go ahead.

Hello, good morning, gentlemen. I had a higher level question for you. Is there capacity for billion to do further deals here or is internal focus fully on the integration of the new mines for now?

I would put it this way. Number one, our strategy has always been that we are primarily taking care of what we have. And that's what I've always focused on. And then we said that we are always willing to look at potential deals if they're value creating. And we've also said that you have to be very careful when you do those kind of deals because it's easy that the deal could be value destructive as well if you're doing the wrong deal and paying too much. So having said that, right now our full focus is on taking care of our old 10 units and the two new units that we've gotten. If something were to show up, we will have to look at it, but we're not seeking any kind of extra growth as of this.

Understood, thank you.

The next question comes from Chandon, are from ZCSD.

Please go ahead. Hi, can you hear me?

Hello, can you hear me?

Yes, we hear you.

Hi, it's Dan Major from UBS. I'm not quite sure where that name came from. Thanks. Three questions on my side. Firstly, just to clarify on this depreciation delta, you said Tara is at 100 million and is going to 275. Over what time frame is that as one part of the question? And Lundin is 500 million of of run rate of depreciation. Is that correct? And then it's 200 million higher when order gets fully ramped up. Is that the right math on the depreciation?

The big part here is that Lundin assets in Q2 are running at roughly a 500 per quarter rate and we expect them to continue to run at that rate. That's including everything over values and so on. were at 50, are now at 100, and are going to end up at about 275. Tara, I didn't mention any numbers. If I said Tara, then it was clearly a mistake. Tara has a slight increase in depreciation as some of the assets are depreciated based on production volume, but that's pretty small in the grand scheme of things. On top of that, ITIC with the DAM investment also has a slight increase.

But that's already in.

That's already in. Both of those are already in. So the main changes that we're looking at from now and onwards is that ODDA goes up from the run rate of 100 right now to 275. Then the rest is in the Q2 books.

Okay. I think that's clear. Yeah, I mean, just one other thing I guess we've asked before, but I think you're the only mining company that focuses on EBIT, not EBITDA. Have you considered changing that? I certainly think investors would welcome it.

Well, you can read EBITDA as well. It's not that we're making it a big secret. It's in there. But yes, we have been focusing on EBIT over time. That's true. Also, yeah, go ahead.

The second question, just thinking about the bridge to earnings in Q3 versus Q4. Maintenance of 400 million is a positive. I think it was 150 advisory charges on the Lundin deal, and then you mentioned 300 million of provisional pricing. Are they the main items we should be focusing on beyond the sensitivities and the depreciation?

I think so. I mean, the grade guidance, we've reiterated that. The only thing I could add possibly is, and I think that the grade guidance for the full year is not changed. It's the same. I think we will have, according to the latest forecast, a little bit weaker in Q3 and a bit stronger in Q4. And then we had roughly 100 free metals in smelting that is going to be difficult to repeat. So maybe some prudent estimates there will be good. I don't know if I'm forgetting something, but apart from that, it should be okay.

And maintenance is not zero in Q3 and Q4 either. You still have some maintenance, even though the 400 comes away, but there is some more coming back.

Okay. That's useful. Thank you. And then just a final one. I guess you'll give guidance on CapEx later in the year. I noticed the consensus is just under $12.5 billion. Is that a sensible number? Can you walk us through those building blocks that you outlaid at the Capital Markets Day, just to be clear?

I think it's better just to refer back to the presentation done in the Capital Markets Day. I think that's pretty clear. And then the only thing that has really changed in the outlook since that time is the addition of the two new units, which we have guided for separately in a press release. So I'll refer back to those.

Okay, thank you. The next question comes from Igor Chubik from DNB Carnegie. Please go ahead.

Good morning and thank you, operator. I just have two follow-up questions. The first one is the internal profits. Can you say anything if there are any one-offs there or is this business as usual, so to say? And the second one is on the balance sheet, given that you have increased your debt quite a bit post the acquisition. I just wonder how you are thinking about repaying that versus focusing on dividends going forward. Thank you.

I can take this one so I get to play CE4 for two seconds as well. Yes. On internal profit, just to be very clear, that is a timing issue. So that one should over time be zero. The only thing that's different this time is that we have this roughly 100 million that has come from the acquisition. They will not go back. We will continue to have those 100 there. The other roughly 200 in there is something that is not expected to be happening every time. It's supposed to be zero over time, which means that you could potentially see that as a positive coming one of the next few quarters. Regarding the balance sheet and the dividend policy, the dividend policy is very clear and stays at the one-third payout ratio. That is what we're going to do. And we will use the other money to pay down debt for the time being. And then if it continues to be positive after the debt has come down under 20%, including the net reclamation liability, then we will think about other ways of distributing money.

Okay, very clear. Thank you. The next question comes from Richard Hatch from Burenberg. Please go ahead.

Yeah, thanks for the call. I've got three questions. The first one is just on costs. Can you just talk us through if you're seeing any kind of costs pressure creeping through to the business. I know you have kind of mentioned a bit of it in the release, but I'm just interested as to whether you're seeing any persistent cost inflation pushing through. That's the first one. The second one is just on the TARA ramp up. So should we expect that mine to be fully ramped up in Q3? And then thirdly, Just on the Kivica grades, you're running about 13% ahead of your guidance. So do you think that you're still happy to expect grades to normalize in H2, or do you think there's scope for a B?

Thanks. Shall I start with costs? Start you with costs. Now, what we're seeing, if you keep personnel, cost and salary apart, is roughly zero inflation. So we do not feel cost pressure right now. Then I can read in the press that there are some speculations about that generally in the markets. We'll have to see. But currently it's about zero inflation for us. Kev, it's a great guidance. The numbers that we've guided for holds, so we'll normalize towards that. And then do you want to take the TARA?

The TARA ramp up holds as well, and the four-year guidance holds of 1.8.

Thank you.

As a reminder, If you wish to ask a question, please dial star 5 on your telephone keypad. The next question comes from Krishan Ugawal from Citigroup.

Please go ahead.

Hi, a quick follow-up. I mean, there's been a lot of discussion on depreciation in the call. So in that context, if I see the consensus number, the depreciation is around $8.5 billion for the full year. Would you sort of agree with that number?

Well, I think the depreciation, to make it very simple, if you take the number that we have in this quarter and then you extrapolate that for the full year, then you're pretty close. You have to add a little bit, 100 or something for Odda, but then the bigger change in Odda is for next year. So I think this quarter is fairly representative for what we should be for the remainder of the year.

Okay, so eight and a half is not a million miles apart from your expectation.

Okay.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Well, thank you. Thank you all for listening this morning. I don't know where you are at, but at least here in Stockholm, it's a lovely day with a lovely weather. And the Stockholm-based crew has probably been waiting to get outside. I just wanted to leave you with the words that we feel stronger than we've done in a long time. We have just done a big acquisition. We have a strong balance sheet and we feel good about our operations. And I wish you all a very good summer. Bye.