Botnia Exploration Holding AB (publ)

Hej, Fredrik Bergsten heter jag, vd för Botnia Exploration som idag kom med sin rapport för första kvartalet. Jag tänkte på den här presentationen få komma med lite ytterligare och fördjupad information kring det gångna kvartalet och lite grann om vad som händer för oss i framtiden. The agenda, as you can see here, together with a nice aerial image of our nice little mine, says that we should first look at some important events during Q1, and that is partly a repetition of some information that we left in connection with the fact that we presented the quarterly report for the fourth quarter and the book closing communique in February. But it is still information that has happened during the first quarter. Then I will talk a little bit about our production situation for the first quarter and a little bit about the expectations for the rest of 2005. Then we will actually look a little bit at the financial result of the position for the quarter. If we start with the important events during the quarter, the most important event for us was that we got a new updated block model. In this picture you can see our old block model on the left and the new one on the right. The biggest thing with it is that we have been able to take in more information, which has meant that we have been able to add this area marked with yellow as a reserve in our plans, which adds up to another three to four quarters of the production time. What we have added here is that we have converted what was previously a mineral supply now to be a mineral reserve. And the incoming information also means that the tonnage has increased a little bit and the halting has increased a little bit. Then the other thing that has been done is that we have in that reserve, now we are counting with a higher gold price increase than we have done before. And the explanations for that are of technical nature. And it has to do with how we break our malms, which I preserved in connection with the Q4 report in January, so we have now found a method. where we work selectively and shoot out the lower part, the inner ring in yellow with a yellow arrow there, and load it out selectively and then drop down the Malmö. The challenge that we talked a little bit about then too, and that has turned out to be the challenge we have worked with a lot during this first quarter, is that the green inner ring area, which is actually a mountain type that is a metasediment, a mafios mountain, a converted mountain, tends to fall down together with the marsh and detach from the so-called hanging wall. This Mafiska mountain varies quite a lot in strength from, as you can see there, about half the volume of the malm to sometimes a little over the whole. This has previously been difficult to separate from the malm and has then been unloaded together with the malm and has gone away as a malm, despite the fact that it is essentially impregnable. This is called over-the-mountain or over-the-mountain. This has been a challenge for us that we believe we have solved now, even if the effect on the outfall before the first quarter has been limited. There will be a greater effect during the second quarter. When we then look at what effect this update had, yes, it was actually that we went from a reserve that we had on January 1, 2024 at 121,000 tons to that on January 1, 2025 we had 171,000 tons, even though we had then broken out a little bit of it. This is due to the fact that we have previously converted resources to a higher level of knowledge than reserves. We have also increased the calculation of the coarse birch mix. We do not think that we can keep Malmö as clean as we have done before, so we have now changed our calculations and calculated 30%. And we now believe, based on the work that has been done during the first quarter, that we, Malmbrytning, will be able to overcome this through urban cleaning. Then I thought that we would look a little bit at the production during the first quarter and a little bit about the expectations for the rest of 2025. As you can see on the table here, we have had a very large focus during this quarter on tunnel operation in Gråberget. And that is mainly to enable us to access this first large scale production site that we have calculated to be able to produce mulch during the second quarter. Malmbrytningen har också varit i något lägre takt via ortdrivning. Vi har haft stort fokus på att åtgärda de här utmaningarna vi har haft med inblandning av gråberg. The first large-scale position has also, as you can see, started to give mulch here just in the last weeks of March, just at the end of the quarter. And this large-scale position, it will give us a lot of mulch during the second quarter, significantly more than what we have broken during the fourth quarter. I would guess somewhere in the order of 14,000 to 15,000 tons. But as you can see, the mulch storage has also increased a lot compared to how it looked right there at the end of Q4. And that's because we didn't manage to run through the allocation campaign that started during March. The situation in the mine looks like this. We have focused a lot on starting up the first large-scale breaking position and this is a picture from it. What we have done here is that we have reinforced the bottom with a gravel layer mixed with cement. The purpose of this is to create a very stable base in the bottom of this The main reason is that in a later stage, when the mine starts to flow towards the end, the mulch will come out under this gray mountain so that you do not have to leave it. Then we have shot down the roof and we have started to fill again. You can see here that it is filled with a metasediment, a very black gray mountain. And this position will continue to give us a lot of mulch during the entire second quarter. As it looks today, this ringed gray area is what is refilled today. And you can see the stretch up the drill hole from the bottom up to the top shelf. This is actually how we go here. We drill, load, shoot down there, refill it, drill the next row, shoot down there. So this is a breaking method that is very effective and goes very fast. When it comes to the enrichment campaign, it started on the 11th of March and it was completed in the first week of April. A part of the delivery of gold from this, about 11 kilos, went away in the middle of March. But the remaining, about 44 kilos from this campaign, was delivered to customers first at the beginning of April and thus became profitable in April. This is something that will be very common for us in Botnia. We often come to have enrichment campaigns that maybe are like this and limit a quarter to the end, or that we have a quarter completely without income, since the average time period between enrichment campaigns is about four months. Then we see that the halters were a challenge in this campaign. These 4.59 grams are not what we want. There are mainly two problems here. It is Överberg that I mentioned earlier. We actually found the measures we believe in. and implemented them during March. It gave the most limited effect in this campaign, but we could still see positive effects. But we believe that we will get full effect on the food campaign in June. If we count this campaign, now we have done a post-calculation and know roughly how much grain is included, down to the level we think we will achieve, about 30%, then you see that the halter would rise a little bit. The other challenge is that we know from previous studies that we have a certain amount of gold in the process. And we are now working on it. It may mean that some of this coarse gold avoids the leaching process as it is right now. When it comes to Överberget, it is above all this green in the hanging wall that has been the problem. Since earlier we have solved it with this that is in the hanging wall, which is yellow and wrinkled. But the green wrinkle has been the challenge. When it comes to the coarse gold, it is primarily the particles that are larger than 80 micrometers that we know occur and have been confirmed in previous reports. You can see in this picture as well. These are very coarse particles. You usually say, can you see them with a magnifying glass? Then they are larger than 80. This is taken with a mobile camera, so they are significantly larger than 80. We have started a study on how we should be able to handle this and how it works in the current leasing process. This is something that is important to focus on. It is absolutely not impossible to extract this gold. We just have to make sure that we are doing the right thing. When it comes to our financial results for the first quarter, since we had a limited income during this quarter from the development campaign, the majority of it ends up in quarter two, it is of course that we have provided a negative EBIT and this is something that will be quite common for Botnia in the future. We will not have income from development campaigns every quarter, since it is on average about four months between our investment campaigns. When it comes to the cash flow, it is also slightly negative, minus 5 million for this quarter. And then you have to remember that the investments during this quarter go up to 10.5 million, of which only about 9.5 million are investments in refining underground. But we have also built quite a lot of marbles that we have not been able to get the revenues for, but which are and are being processed in the Ministry of Finance. The value of that marble was 17.3 million compared to 4.6 million at the beginning of this quarter. So it is clear that we have accumulated a lot of capital in those activities as well. And this is capital that is released very soon at the beginning of the second quarter. When it comes to the balance sheet, we still see here, actually what is worth noting is that the reason for the increases continues to increase, and that is because our investments continue to be somewhat larger than our deductions. And it will be so during 2025, to then turn and the deductions start to be larger than the investments during 2026, to basically just become deductions of everything from 2027 onwards. That was really what I had in mind, and now I understand that we have some questions.

Thank you very much for the presentation, Fredrik, and as you mentioned, we went into some questions. If we look at it, it's a fairly large movement on the currency and commodity market. How do you see the issue of insurances and hedging?

We have chosen not to work with insurance and hedging. There are several reasons for that. When we started the business, it went very well and we are very proud of that. But of course there are uncertainties about how much and what time plan we will actually deliver the gold. And if we take a hedge position and then over or underperform, it can have quite large financial consequences. So we have chosen not to look at it, but it is something we will of course look at, possibly for the future. You hope you have a little bit of knowledge about it? Yes, we know about the situation, but just when you are about to start a new business, the operational risks are greater than the risks of the volatility in the metal market, I would say.

I understand, I understand. If we look a little further, we can imagine that you will present more plans for each week, because you have mentioned that it will happen during 2025. Can you specify something?

Yes, we have initiated some studies around the oak tree and what I want to note so far is that we will have to redo the plans a little bit compared to how they were formulated earlier. And we will probably also need to do a certain completion with a few more boreholes just to define a part of the foundry a little better. Hopefully, this is a work we can do during the summer this year. And that means that we get the answers sometime after the semester and then we can start to put together the plans and communicate a little more about it.

So there might be some answers to the Q3 report?

Maybe, hopefully. I don't want to promise anything right now, but we... I understand.

But if we look a little more, you mentioned satellite discoveries. Do you think that type of discovery in the future will be visible or how do you see it?

Yes, it's hard to say today, but there are a couple of interesting satellites around the mine in Färborkärn that are worth investigating. It requires that we do some complete mining and some metallurgical studies. But it looks so nice and with the thought of the established infrastructure we have in the mine. To be able to break a small satellite that is very close to the pit is cost-effective. We don't need to create our own establishment and infrastructure for it. It can be handled from the ground up.

It's a very smooth infrastructure. Exactly.

That's the way it is. It increases the probability when you have a functioning business that you can get these nearby satellites in a more efficient way.

without starting a project that is way too big. But if we look at it geographically, is there a project in the near future that might be interesting for you to acquire, or what are your thoughts on that? Is the acquisition all the way out in the end?

The acquisition is definitely not completely finalized. And it is clear that we are looking at things that are in the near future. Right now we have no plans for acquisitions. And if we were to look at such acquisitions, there is a project that is a little higher in the scale of fashion that we should look at. But right now I can neither conclude nor confirm that we are looking at any acquisitions.

I understand, I understand. If we take a closer look, you have high environmental requirements. Is it possible to get a premium with the market for that compared to gold that comes up under worse conditions?

That is something that is more common when it comes to base metals, copper, zinc, iron ore and so on. Is it possible to get these bonuses on iron metals and on gold in particular? Then it is very difficult. I would say impossible. There is not enough gold. There are greater opportunities for base metals.

I understand. If you look at this presentation, you mention the small particles that prevent the laking process, if I understand correctly.

Yes, that we might be mistaken about.

And when you have started an investigation on this, when do you expect the results from that to be presented?

Det är lite svårt att säga. Det är lite prover och analyser som ska skickas in och det ska väntas på en rapport. Vi hade hoppats kunna komma ganska långt innan vi går på den svenska obligatoriska semestern. Men kanske att vi kan ha ett svar på hur vi ska hantera det där under hösten.

Even though I think if we look forward here, I know that it can always be difficult with guidance, but is there any forecast for the coming quarter that we could take part in?

We from Botnia are usually careful to come with guidance for individual quarters. Because we have this, that we have four months on average between the pension campaign. Sometimes it can be a little shorter, sometimes it can be a little longer. But they can also glide back and forth a little bit depending on how we get the planning together with the pension agency. That should also be true in their process. As soon as it can be moved a couple of weeks back and forth. We usually do not want to come with any guidance for individual quarters. What we want to do instead is that we want to guide really for the whole year. And there we are actually convinced that we are quite safe with that we can achieve a malm production from the mine at about 50,000 tons. And that we can also manage to send about 50,000 tons through the Sanitation Agency. And that is the limit per year for the environmental conditions we have for the present. Then when it comes to what halt we will get through in the Ministry of Environment, the positions that we break during this year have a halt that is a little lower. than the average in the vicinity. Then we have had these challenges during the first quarter with the gravel relief, which actually waters out Malmö a little bit and makes us get a lower halt. But we think we will land somewhere around a gravel-adjusted halt, roughly as we have seen for this campaign, adjusted for Överberget.

So quite according to the calculations, it is somewhat of what we say?

Ja, en halvt som är ett par gram under genomsnittet av fyndigheten.

Stort tack för att du kom hit och presenterade och svarade på våra frågor. Det ska bli väldigt spännande att följa er framöver.

Tack så mycket.