Boliden AB

Ladies and gentlemen, I'd like to welcome you to Boliden's Q1 2026 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 led by the operator. Mikael, welcome.

Thank you, Olof, and welcome to all of you. We are welcoming you from Askersund. For those of you who are maybe non-Swedes and wonder where that is, that is the closest bigger municipality to Zinkruven. We will have our AGM here in a couple of hours, following the tradition that we try to have our AGMs close to our operating sites. Now, regarding the quarter, the highlight for the quarter is that we've had a a good production quarter. We're coming in with an EBIT excluding the process inventory revaluation of around 4.4 billion Swedish kronor. and also a strong cash flow, also considering that Q1 is normally a relatively weak cash flow quarter. We've had solid performance in both of our operating units, so we've had it in mines and in smelters. And then on top of that, we have strong metal prices, and with our business model with definite pricing coming a little bit later, we of course benefit from having strong metal prices than when revaluating previous periods deliveries. The gold and silver production has also been very strong in the smelters. Regarding the gap by inset, I'll come back to that one, but the impact on the financials for the quarter has been 400 million negative on volumes and 700 million negative from a one-off write-off of assets connected to that. In ODA, we have managed in the quarter to start the ramp up of the expansion project. We had the first feed, I think, on March 31. And I'll come back to that also in a little while. So the financial performance in general has been strong with a strong cash flow. The capex in the quarter is right around where it should be according to our budget and according to what we have guided to you. On Garpenberg, I think it's time to take a little bit just so we get these numbers more in perspective. As you all know, we had a rock fall and followed by seismic events that happened in mid-March. What then happened is basically three things that we need to separate. In Garpenberg, we have altogether 105 million tons of reserves. The upper part of Lappberg is 14 out of those 105 and we have 91, which is other positions. Those other positions were basically totally undamaged, whereas the damage to the upper part of Lappberg was substantial. And then we have all the infrastructure in Gapenberg that was damaged, but not very severely. So what has happened now? Well, given the fact that we have all these 91 million tons left, but it's largely undeveloped, the most critical thing, the critical path for us is to get development going. And I'm very happy to say that As of last week, we had our first development explosives and the tunneling is now going on at full speed. We have gotten all power restored. We have pumping restored. We have ventilation restored. We have pumping water restored. So we are able to do lots of things. There's certain infrastructure. I would say also the workshops by way are restored and working fully. There's some infrastructure linked to the paste infrastructure in the mine. and also linked to the ore hoist and the personnel shaft that are still being repaired and will take another couple of weeks or a couple of months to get ready. But as I said, the critical path to get the developments going has been passed. Regarding the guidance for 2026, we had to give a very rough estimate that once we get up to production, we will produce roughly 100,000 tons per month and we're standing by that so if you we're going to be able to get only later in this quarter up to production so we have 100 000 in q2 and then we have about 100 000 per month for the rest of the year if you add that up together with what we have already produced you get around one and a half million tons so the guidance for 2026 is right in line what we had said before Now, we are now issuing two new pieces of guidance, which I think are very important. Number one, we are saying that for 2032, we should reach full capacity, and full capacity is not just the 3.7 million tons that we had before this happened, but the 4.5 million tons that we had guided for the capital market stage. So we will reach the higher production level in 2032 that we're going to do. And we're also issuing that we're going to be able to get to about 2.3 million ton or just shy of 200,000 tons per month in 2027. So the developments are going ahead as expected and actually faster than expected so we can get mining from the other ore bodies up into speed. In this plan, we have not put anything in Lappberget because the upper part of Lappberget is still very much unclear. We have not been able to get our arms around, fully inspect, been able to think what we potentially can produce and with what method and at what cost can production be done. We have hopes that this is going to be able to get production out of there to some extent, and that's going to help us for the years 28, 29, and 30 and so on, but that's still very much unclear, and we'll get back to that once we've been able to get our arms around the Lappberg situation. So that's hopefully giving you somewhat of a good understanding of where we're standing on Garpenberg. If you look at our other projects, I already alerted to all that. We're happy to announce that we had first production, even though it was on the last day of the quarter. We got some little production in there. We've had some teething problems during April to get this one up to speed. We've had to change some elements in a boiler. We've had some pumps and we've had also some of the small risks that need to be changed. As we're speaking right now, it is up and running again. We haven't produced much in April. Hopefully, we'll get up to speed and have good production in May and then in June going forward. The other projects, the Rönnscher Tankhouse is progressing very well. We're still, just as we said, on the capital markets. They were aiming for a start in Q4 of this year. Boliden Sand Recycling Project, very much running forward on track. And on Garpenberg, the expansion... with the new shaft. That project is also, although it's very early days, moving ahead and we do not see that that will be impacted by the seismic events. We should be able to pursue that project according to the original plan. On the ESG side, I'm happy to announce that the positive development here is that we're going down in the sick leave and we're about to hit pre-COVID levels finally after having been way above that for a while. So sick level is really going the right direction. The LTI frequency is We've had a little bit of a setback in the quarter. Now the numbers are still quite much lower than they were if you go back a couple of years, but we're slightly worse than we were the same quarter last year. On the greenhouse gas effect, it might look silly here as it looks like we're increasing it. But here you have to remember that we have not restated the numbers for the Lundin acquisition. And if you do that separation, we're very much in on our plans for our decarbonization program. Market side. The market side has, of course, been what has been really pushing us up in the last couple of quarters. You can see here from the graph that the metal prices have gone up. And even though they peaked a little bit early in the quarter and they came off a little bit during the quarter, it's still on a very high level. At the same time, you can also see down there that as the metal prices tapered off a little bit, we actually got some positive push again from the currencies in there. We also have relatively weak TCs, although TCs is getting less and less important as part of the revenue mix for a smelter. We also see byproducts, especially sulfuric acid prices, growing on spot. We have a contract portfolio that doesn't really contain any spot on sulfuric acid prices. So we haven't really seen the uptick yet, but if these levels continue to be on these levels as we see them today, of course, that will slowly also get into our longer-term pricing that we have. If you start looking into the outside world and where we're standing, you can see that copper prices have remained on a relatively high level, actually going up a little bit here lately. You can also see that the margins for copper mines in the world are actually very large, and it looks like every copper mine in the world is good at getting cost out. This is, of course, not quite true because the reason for the cost reduction is very much linked to the high gold prices that comes as a negative to the cost level. The same thing on the zinc price. You can also see there that the price level is stabilized on a decent level. Costs are coming down very quickly. This has to do with the silver content in the mine that comes in as a negative cost. If you look at our production, I would say that ITIC is producing more or less according to plan. We've had a winter quarter and then still working through the diorite issues. The grades are relatively low, but we are unchanging the guidance for the year. We still expect higher grades to come later in this year. What you don't really see in the picture here, but we just want to make the point, is that after having had a couple of years of quite low stripping development, we have been able to push the stripping quite a lot already in previous quarters. And in this latest quarter, it was another very strong mine production quarter in the sense of lots of stripping going on, which we felt very good about. Garpenberg, we've spoken quite a lot about. I think that we don't have to say much more about that right now. In Kevitsa, stable and reliable production. It's been a good production quarter. Here the grades are picking up according to exactly what we have also guided and also very happy that the recoveries are also going up in Kevitsa. That is sometimes actually related to exactly to the higher grades. Saminkor, despite the fact that we lost, as we've spoken of before, we lost a week in the mill due to very heavy rain, we managed to keep on producing... in the mine, and we've caught up maybe some of that already in the quarter, and the rest will catch up during the rest of the year. So we had a very stable production and a good production coming from Somen Corp. Zinc Ruvan, where we're standing today, also had good and high milled volume. Tara, slightly below expectations, but still in a ramp-up phase, and we still feel relatively good about that. On the smelter side, also good production quarter, improved process stability in Rönnskär, increased silver production coming out of intermediate products, which has helped us. High about the also stable production, copper cathodes coming out in a good way. We have slightly lower nickel production due to feed mix, where we've had to add pyrite to get the energy balance right. Coca-Cola, strong production, generally speaking. Beiser, small unit, but very strong and stable production. And all that we've spoken about a little bit, we had the first feed in the quarter, but we have not been able to speed that up and get it into meaningful production numbers. So with that, Håkan, I'll leave it to you and talk a little bit about the numbers.

Thank you, Mikael, and good morning. As Michael said, we had a good quarter. We deliver an operating profit excluding process inventory of $4.4 billion. which is actually one of the better quarters we've had. Free cash flow at 1.7 and earnings per share of 13.45. So all in all, a good quarter. Looking by business area, you can see that both mines and smelters are roughly on par with the profits from Q4. Mines is on par with Q4 in spite of a hit from the Garpenberg event of about 1.1 billion. Smelters is on par with Q4 in spite of Q4 being positively impacted by a one-off in Rönnskär of 400 million. So all in all, a strong underlying performance in both business areas. Internal profits roughly zero in the quarter. Looking at the EBIT bridge year on year, comparing to Q1 of last year, as you can see, we are helped by stronger prices, close to 1.8 billion, positive impact there. And that's, of course, mainly a result of the strong development of metal prices that we've seen. Metal prices alone contributes by more than 3 billion. It's mainly gold, silver, but also copper. And then on the negative side, you have currencies and a little bit of TCS that adds up to 1.8 in total. Volumes are higher, and this number is explained entirely by the acquisitions of the two mines in Sinkjurven and Samminkor. Then on top of that, you have a negative impact from Garpenberg, which is then offset by positives in other operations. Same thing with costs. That number is entirely explained by adding two new mines, excluding those new mines and comparing apples to apples. Costs are more or less exactly flat. So we see an inflation roughly at zero and good cost control in the operations. And then you're aware of the one-off that we've had here, and that's the write-down in Gärpenberg of 700 million. Comparing sequentially, again, very strong development in prices, positive 1.3. It's basically across the line for most metals, but with gold and silver being the main contributors. I should also say that the provisional and the definitive pricing of contracts that were open at last quarter end, December 31st, contributed by about 450 million. But I think those of you that are modeling it in detail would have that number in there. Volumes, a negative impact, mainly as a result of the Garpenberg seismic incident. And then Q4, our costs are significantly better than the fourth quarter. The fourth quarter was an expensive quarter. It typically is. We had a lot of contractors and external services. And also, as we had a good run of prices towards the end of last year, we had to adjust provisions for profit sharing and similar, which weighed on the cost in Q4. But, you know, good cost control. Moving on to cash flow. When we talked about our earnings, we talked about the CapEx, Michael did. I'm happy about the working capital side. Typically, we tie... about 1.5 billion in Q1. Q1 is normally a weak quarter for working capital, and this time we're roughly flat in spite of stronger prices. So it's good work in the smelting divisions behind this, working with working capital, working with inventory reductions, and then also a little bit of impact from the situation in Gapenberg. Another thing that stands out here is the tax side. Again, we had a good run of prices towards the later part of next year, and we've been catching up in In tax payments, there is always a delay there, but you see it's a significant amount paid in Q1. All in all, this leads to a strong balance sheet, net debt to equity of 18%, payment capacity of close to 22 billion, and all in all, a strong balance sheet. So with that, Mikael, you want to continue with the outlook?