Boliden AB

Ladies and gentlemen, I'd like to welcome you to Boliden's Q3 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 have a Q&A session which we will start here in Stockholm. Mikael, welcome.

Thank you, Olof, and welcome to all of you as well. There, the camera is coming along. So welcome to all of you as well. I say welcome from a very rainy Stockholm this morning. I hope that hopefully some of you will have a little bit better weather where you're standing than we have right here. Now, having said that, I think we have a positive results presentation ahead of us. If we just take a quick summary, I think it's no news to anybody that it's been very good prices and terms during this quarter. And as you know, those of you who have been with us for a long time know that what is most important for us regarding our results is maybe not the average prices and terms in a quarter, but price and terms at the end of the quarter because of our definitive pricing model that we have and we had good prices in the end of the quarter which is important now having said that price and terms are not everything going the right way currencies are of course against us but less than the positive development of metal prices and also metal prices is a mixed bag where gold and silver has had an enormous rally in the quarter uh Copper also strong development, whereas zinc more neutral and nickel quite an appalling development. From our side, we've had good production, solid production in our mines in general. We've had record mine production in Itik. That's not ore production, but mine production. The stripping has been very good and very successful, and it's giving us more opportunities as we move forward to have flexibility in Itik as we will be approaching more interesting ores and better grades coming in future quarters. We also have record mill volume in Garpenberg in the quarter. The integration of the two new units, the Lundin units in Zinkruven and Sommerkor, is working very well. It's working so well that we have more or less formally stopped our integration project, and these two units are now operating as an integrated part of Boliden, more or less in all aspects. And then we did get, regarding our new potential projects, we also, during the quarter, got the mining concession for the Laver mine, This has been appealed, so there's going to still be a process ahead of us until we can move forward and move towards an environmental impact assessment around lava. I should also say the key projects are progressing well as well. I'm coming back to that a little bit in a later slide. So the financial performance, if you start there, we have an EBIT excluding the process inventory revaluation of 2752. I suppose we'll round it off to 2.8 billion Swedish krona. There is some items regarding one-off item in there. Håkan will talk a little bit more about that. Cash flow was strong at 1.3 billion. Part of that is still we're getting some insurance money, but we've also had the strong underlying earnings and with the favorable working capital development has been helping us to get this positive cash flow. That also means that we have net debt to equity down to 25%, which is actually similar to what it was a year ago, but now we have bought in the meantime two new mines. Cap ex in the quarter, 3.8 billion Swedish krona, which is more or less in line with expectations. On the key projects, Odda I suppose is the one that should be talked most about. Hot commissioning is underway. Coal commissioning is in the finishing, hot commissioning underway. This is, of course, where it's very interesting to make sure that all these new units not only work by themselves, but also work integrated with each other. We have started, the leaching comes a little bit before, the Odda leach product. We actually had the first production just a week ago coming out. And that one seems to be working well. The main part is when we fire up the new roaster, and that's expected to happen in about, say, two or three weeks from now. And we will start feeding this one late November or early December. The Rönnscher Tankhouse on track. Not really any news. Ramp up during the second half of next year. The Bodling area tailings sand and recycling is on track and moving on fine. And the Garpenberg expansion to 4.5 million tons. We're still pending a permit here, which is important for the project, also important for production this year. But the PACE project that we have started and announced in the Capital Markets Day is moving along according to plan. On the ESG side, we also had a very good quarter. Greenhouse gas emissions, you might think when you see this that this is a bad development, it's higher than last year. But you have to remember that we have not restated last year here for the two new units. So when you look at this on an equal basis, comparing apples to apples, we are continuing very well on our greenhouse gas plan to reach our science-based targets. The LTI frequency is down. It's down significantly compared to last year. It's down also compared to previous quarters. And if you add it up and look at the last 12 months, we're coming down quite significantly, which is good. The sick leave is also lower. It's the lowest number we've ever seen since COVID. And this is also tracking in the right direction. And hopefully we'll continue to do that to develop even further. On the market side, as we said, if we start with a negative, yes, there has been a negative development in the US dollar for us, which is... clearly negative, but that's clearly compensated well by both higher copper and zinc prices with a strong performance towards the end of the quarter, as I said before, and then a gold and silver rally, which has been very strong this quarter. There are some weak spots on copper TCs, spot copper TCs, while the zinc spot TCs have come up quite significantly during the quarter. If you look in the world of our three main metals, you can see that it looks here like the costs are coming down in the copper sector to the left and also in the zinc sector in the middle. In reality, this is a lot about gold as a byproduct driving down costs and silver as byproduct driving down costs. You can also see that the copper price is significantly above the cost curve in industry, which of course indicates that there is a downside risk in the copper price, especially given the increases that we've had recently. On the zinc side, yes, zinc price is clearly above the cost curve as well, not as much as in copper, which also limits the downside risk of zinc looking forward. A totally different story is nickel. You can see nickel, lots of cost cutting here. Part of this cost cutting is also bimetals in terms of PGMs and maybe some gold or silver that's in nickel mines around the world. But it's also very hard cost cutting in some high cost mines being pushed out of out of the business, which means that the the quartiles come down. But as you can see, there is absolutely no margin whatsoever for the typical nickel miner and the stress or the ability to take lower prices is very low. And that's why we see that there's actually some capacity already coming offline. If we look at ourselves and our production, as I hinted before, the mine production, total mine production was really high in ITIC, record stripping, which is good for the future. The actual mill production was in line with what we said we're going to be able to do this year. We've had low copper grades, that's nothing new, but they were maybe lower than ever in this quarter, which is a way of saying that we're coming closer to the higher grades. Bullion area, very stable production, strong gold production, even though it was slightly lower than Q3 of last year, but that was, on the other hand, a very strong gold production quarter. Garpenberg, record mill volume. You can see that we already, with the small investments that we've done in the mill, you can see that the 4 million pace is almost doable already today. But as you said, going forward, we are constrained by the environmental permit, which is at 3.5 million tons. We have hopes that we will get a new permit early enough in the quarter so that we don't have to slow down. But we don't know until we get it. In Kevisa, we have now mined out stage three. We had a good production of 2.7 million, which is more than last year. And as you also know, the situation there is higher than the kind of Pareta pace that we can have because 10 million tons is our environmental permit there. So 2.7 and a quarter, we cannot have sustained on that level. Somincor, first full quarter within Boliden, so now fully integrated. Improved operationally versus the previous quarter, the first quarter we've had. I would say generally Somincor is performing roughly according to our expectations that we had when we did our due diligence. Zincruvan, also first full quarter with... with Boliden, smooth production along the value chain within Zincrevan. We're actually very pleased with those two acquisitions as they come. On the smelter side, maybe not perfect production, but still good production. Rönnsjö had planned maintenance and had some unfavorable feed mix, which meant that we were a little bit constrained on production there. Harjavalta, as you remember, had a very big problem with the nickel line in Q2 that has been reversed. So the nickel line has been operating normally in the quarter and also generally, you can say stable production. In Kokkola also stable production, good feed mix by the way. ODA is, of course, impacted by the project, which means that you're not fully able to reach all the capabilities that you normally have. So we've had a somewhat constrained production compared to previous quarter. We've had a lack of intermediaries that have made it a little bit difficult to get the balance right there. And then basically our smallest smelter that we don't talk too much about since it's a relatively small one, but they also had record production. It's the maximum production of lead alloys that they've ever had. And basically it's a small unit, so you can talk about it, but sometimes you need to give the credit. They've had an outstanding overall equipment effectiveness in the quarter. On the financial side, Håkan, I'll leave it over to you. Thank you.

Thank you and good morning. Well, as Mikael said, we have delivered an EBIT excluding process inventory of just about 2,750,000. That is significantly up to the previous quarter, Q3, but a little bit lower than what we saw one year ago. I think on this slide, it's also worthwhile highlighting the EBTA, the operating profit before depreciation, which is up 16% year on year. It's a good number there. And also the operating profits when we include the process inventory is up compared to both comparison periods. Investments are in line with plan and the free cash flow is strong. And I'm of course happy about that. I will come back to that slightly in a later slide. Looking by business area, you can see that mines had a solid quarter. Very good performance and an EBIT of 2.4 billion SEK. Mikael talked about good production. It was also helped by good gold deliveries out of the Boliden area where they emptied some tanks and shipped gold to the Rönnskär smelter. That boosted that profit a little bit, a couple of hundred. But as long as it's still in the group, we have to eliminate it. So that is also the reason why the other and elimination is a pretty big negative number. But good anyway, and we'll of course release that profit once it has passed through the smelting process. Smelters up compared to Q2 of this year. had significantly less maintenance but also slightly lower free metals and Mikael talked about some unfavorable feed mixing in Rönnskär among other things but all in all a strong result if we then move on to the EBIT bridges starting with a comparison year on year Q3 of this year compared to Q3 of last year we have a price impact of plus 270 million Swedish krona. In there, there are things moving in different directions. The contribution from gold and silver is close to one billion in terms of approved profits, but it's then partly offset by a weaker dollar where we've seen a sort of rebalancing between gold and dollar and lower TCs, but net effect positive on the price side. On the volumes, of course, the new mines, the acquired mines, and the restart of Tara contributes positively. But we do have year on year a negative impact in ITEC, both regarding grades, but also the diorite intrusion and oxidized ore. We also have, even if I in the previous slide talked about strong performance in Boliden area, last year was exceptionally good in Boliden area. And we also have slightly weaker in Garpenberg. So there are a few things offsetting the addition of the new mines, but all in all, a good improvement. Costs, again, ramp up of Tara and the acquired mines drives up the cost. Apart from that, we do see a good cost control in the system. If I take away the new mines in Antara, we have a cost reduction of about 3%. And our assessment is that it's a mix of basically flat inflation and a good cost control in our units. Depreciation, well, some in Korsinkoven and Tara contributes and then we have started to depreciate the dam project in Aitik and we have some increase in Odda. On the items affecting comparability, as you might recall, we had a total insurance coverage of 3.4 billion. and we have been discussing the final 65 million of those for about a year. We have reached an agreement on that right now so therefore we can recognize that on the P&L and that means that from a P&L perspective the full 3.4 billion has been recognized. Sequentially, comparing the profit development, prices are up about 550 million. It's roughly equal parts zinc, gold and silver, all performing well. I can also remind you that the system with preliminary and definitive pricing contributes. The open positions that we had at the end of last quarter that has then been valued finally, contributed by about 100 million. But then on top of that, as you know, we have, we price gold and silver on two months mama, meaning that gold delivered in in October, for example, gets its final pricing in December. And that means that a big part of the production of precious metals was priced in this closing at the prices as of the last day in the quarter. And since we had a good run with gold and silver, that had a fairly big impact on the result. Well, it's the full effect on the acquired mines that you can see here. Part of those set by a little bit lower volumes, free metals in smelters. Costs, even though we add the full quarter of Sonicor and Syncruma, we have lower costs. and that is because we have less planned maintenance in smelters, but we also have a seasonally lower cost, as many of you know, in Q3 every year. Then moving on, the items affecting comparability, that's the plus 191. We had a cost last quarter related to the transaction cost for the acquisition, and this quarter we have a positive insurance revenue, and the 190 is the combined difference between those. Moving on then to cash flow. We've talked about the earnings and EBTA. We talked about investment, but I think what I like to highlight here is the strong development in working capital. We have been successful to get inventories out after the maintenance stop. Normally when prices increase, we see a negative amount here, but this has been a successful quarter in working capital development. And I'm happy also that it's the second consecutive very good quarter when it comes to working capital. So that's good to have that cash generation. You also know perhaps that from a working capital perspective, Q4 tends to be the strongest quarter of the year. Last year, we released about three, three and a half billion. I think given the successful Q2 and Q3, it might be a bit less released this year, though. But still, we're on a good trend with working capital. So finally, the balance sheet, the capital structure, Mikael mentioned that we have a net debt to equity of 25%. We're happy about that number. The strong cash flow, of course, contributes, but also the process inventory revaluations, the unhedged inventory where we have good development of metal prices contributes to net profit and also to equity, which also improves this number. We're happy about that and we have a strong payment capacity and a robust funding all in all. So, Mikael, care to continue?