8/15/2024

speaker
Mikael
Host / Interviewer

Good morning, the clock has struck 10.30 and here we are in Insight Direkt. During the morning, it is the mining prospecting company Viscaria that has released its report for the second quarter of 2024. And we welcome Jörgen Olsson, CEO. Welcome!

speaker
Jörgen Olsson
CEO

Thank you so much Mikael, and I'm sorry for your little mistake. It's supposed to be Gruvaktiebolaget in Skarja, but that's okay. Our name is completely new since the 22nd of May and I will comment on that. But thank you again.

speaker
Mikael
Host / Interviewer

How do you feel about the initial thoughts in Q2 before you put the presentation?

speaker
Jörgen Olsson
CEO

We are ending yet another intense quarter. These are extremely intense times for us. We are at the end of our profitability studies. We have still got our environmental status. We are intensifying our work by getting a low-power state so that we can start on a full scale. So it is full activity. From Monday to Sunday.

speaker
Mikael
Host / Interviewer

Fun. I look forward to hearing more. Without further ado, I welcome you to make your presentation. Then I'll be back and ask some questions.

speaker
Jörgen Olsson
CEO

Thank you very much, Mikael. And with me today, as usual, is our CFO, Frida Kesketalo, who will We'll talk about that later. I'm standing here today in our drilling facility, which is full of activity, actually seven days a week. We drill intensively and have in other communities in Ålborg drilled even more intensively than this a little later. We have made a new mission and therefore we have a lot of new interests with us and some of them may be listening here today. So it was a short repetition. We are of course a company that is going to open our copper project in Kiruna at Skarjagruvan. But we also have two other foundations, one in Arvidsar and one in Tvisbo. We have three processing plants up here in Kiruna, but in total we have three more in the group, two in Arvidsaur and one in Tvisbo, and we have a total of 14 research facilities. And here in Kiruna we have both a detailed plan, we have a land permit, we have a land permit and we have environmental conditions, research facilities and processing plants. Some of the conditions are compromised, I will come to that a little later. We have about 35 full-time employees and about 30 full-time engaged consultants. So it's a real project. And we have a fantastic promise that many of you have known since earlier. We have largely doubled the resources since we started our project in spring 2020. And we have invested a total of 1.5 billion Swedish kronor in the project. Again, Frida will go through all the figures. Yes, it has been an eventful year, not only Q2, but also Q1. Of course, there was an event on the 6th of May during Q2, when we got our environmental status. Right there, we changed the name to Gruvaktiebolaget Viscaria, and the reason for that was that we thought it was time to change some clothes, if you can put it that way, from a prospecting company to a mining company. We had already got our status. The name in itself, Viskaria, was easy for us to choose. The company that broke copper here earlier, from 1983 to 1996, was called Viskaria AB. Viskaria's name is spelled with a lot of positive words. signals here in Kiruna. It was a very popular workplace. People carried Viscaria on their backs with pride. And we have received a lot of positive reactions just from this simple thing, the name change. Furthermore, the name Viscaria comes from the flower Viscaria alpina, which is one of the few plants that can grow on a lot of copper-rich soil, so it grows a lot Viscaria alpina in our area, a fantastically beautiful flower. We are interested in our work with the completion of the salary study that we will present towards the end of the year, together with a resource update. We drill seven days a week from the large activity behind the Harjeborg nuclear power plant. Seven days a week, all day long. During the first quarter, we have been drilling about 10,000 meters. During the second quarter, we have been drilling another 25,000 meters. The absolute lion partner of drilling is so-called mine planning, or infield drilling in mining language. This is to ensure that you get as good and quality mine plan as possible. Uppstartsperioden är en kritisk period vid brytningen av en ny gruva. Receptet är att investera mycket på förhand. Att göra en väldigt noggrann gruvplanering för att du ska få en förutsägbar gruvstart. Miljödomen som vi fick den 6 maj, den överklagades den 27 maj. Det var då överklagaren tidigt gick ut. There were three private persons who were accused. The two Sami villages, Levas and Gabbna, were accused. The county council was accused and we ourselves were also accused. The county council withdrew its accusation a little later. And the Sami villages, Levas and Gabbna, have proceeded to develop their accusations by midnight tonight. So we have not actually seen their accusations, but they left blank accusations. Of course, we try to maintain a dialogue with all business owners, not just those complaining business owners, but all other business owners in our area, to keep everyone informed and ensure that we can have a predictable process. And based on that, our goal is still to have a strong state of mind by the end of this year. Then in June, we made a successful targeted new emission of 440 million kronor. And we got, at the right time, three new institutions, which we are very happy and proud of. Swedbank Robur, SEB Stiftelsen and Ålandsbanken Fonder. And these three institutions, together with the earlier institutional investors with us, the Fiat AP Fund, Scandia and Handelsbanken Fonder, put all the real sums into this new investment, together with many of our largest shareholders. And we are very happy and grateful for this continued financial support that we maintain. And where we are all spurred out of the fact that the world is facing a global copper shortage. And it is clearly visible now, but will be even more visible at the beginning of next year. But not least, Europe already has a huge copper shortage today. We import more than 50% of all the copper that we consume in Europe today. And we need to be more self-sufficient of this important raw material. In connection with the environmental bill on May 6th, we also received an organizational order. And that meant that we could take part of our environmental status into account already on August 1st. And we did that with a message. There were no courteous spades with politicians that we showed up, but we have 15 construction machines in place out in the area. And you will see a little clip in a while about all the activity and preparation work that we do. All this activity, our good financing, our high energy and commitment makes our plan to open the Viskaria mine by the end of 2026 fixed and to be able to produce 30,000 tons of copper per year. You have seen this picture earlier. In the polka line there is our mine area. You can see that we are very close to the LKAB. It is up in the picture. And I'm going to show a bit more of a magnification of what's happening after the 1st of August, what we started with. So we take and magnify this picture on the Polka Geyser area. And then you have it here. And then I do another magnification in the slightly blurry picture up to the right. And then we do a markup so that we can make a material layer. You can see it up to the right, because now the equipment on the area is starting to come in. We do a large parking lot and to the left, the leftmost pillar there, we cover the ground and cover the ground for our water cleaning facility, which is the largest investment right now. You will see a little more detail in the film. If we look specifically at the water cleaning facility, which is a large investment, a 2800 square meter large This is an enlargement of our pilot water cleaning project or hall that we have had in operation since November 2022 with fantastic results. This hall we start with construction right now and the construction and will complete it under Q3 under 2025. It has the capacity to pump and clean 1000 cubic meters of water per hour. It is a large facility. With that, I think we can see a short film break of one and a half minutes, where you can see the intensive activities that we have started on August 1st and that continue to run right now. So please start the film.

speaker
Unknown
On-site Video Narrator

This is an incredibly important milestone for us, because it allows us to quickly get down into the mine and be able to break Malmö as soon as possible. To take the condition into account is completely in accordance with the Court of the Land and Environment Court on May 6th. And we have done that now on August 1st. And that basically means that the entire site is a construction site. The work takes place everywhere. Behind us is one of the sites where we are preparing the groundwork for the water supply facility, which will be ready in about a year. There are about 15 antipedal machines, there are dumpers, milling machines and loaders. Then we also have two crossing facilities in progress that cross masses towards us. The pipes will be pulled, the pumps will be installed, we will draw electricity to all different pump levels. This is an incredibly important milestone for us, because it means that we can quickly get down into the mine and be able to break Malmö as soon as possible. The next step is that our environment wins power. And when that happens, we can seal in the entire area and continue with the large infrastructure projects. Build dams and build construction works, as well as our nursery. So that will be the next step after this, but this is the first step, stage one, and it was incredibly good yesterday.

speaker
Jörgen Olsson
CEO

Thank you very much and welcome back. Yes, you can see for yourself the intensity and energy that we have to deal with this situation. And after four years of hard work, bit by bit behind a desk, it feels fantastic to get to work every day when you see all the activities in the area. It gives energy and you need to continue to work forward. But with these words, I hand over the word to our CFO, Frida Kesskuttalo. Please, Frida.

speaker
Frida Kesketalo
CFO

Tack för det. Det här är då en bild över tidplan för återöppningarna av Viskaria. Och med de aktiviteter vi startat upp under 24 men också kommit i mål med så har vi då skapat förutsättningar för att kunna hålla tidplan där vi avser att starta upp de riktigt stora byggnationerna, inte minst Anriktningsverket under 2025, men också andra delar som Sandmagasin och så vidare. In order to complete that and actually be able to start up the rupture of Brågås and have our first copper concentrate by the end of 2026. And then I will present it to the company financial quarter, quarter two. And here I want to start with a summary and link back to the essential events that have happened during the current quarter, but also after the reporting period, that is, up to today's date. And then there will be a repetition here, but we kept our environmental condition on May 6th this year. We also kept the land registration according to the court decision on May 13th. In June, we carried out a successful new emission, an overwritten one. And then, just as Jörgen also said, we took the environmental condition in application on August 1st through the organization we got. That is, now we have started this up for real. All these events reflect our financial position, because we have a strong cash flow and we can keep a high pace in all our preparations. If we look at a summary of the financial report in figures, it looks as follows. On aktiverade utgifter för prospekterings- och utvärderingstillgångar- så har vi upparbetat 92 miljoner innevarande kvartal- och vi har 149 miljoner för årets första två kvartal. Vi har ett rörelseresultat på minus 11 miljoner för kvartalet- och minus 22 för första halvåret. Periodens resultat uppgår till minus 12 på kvartalet- och minus 24 för första halvåret. And if we have a negative turnover result, it will continue to look like this for a while. This is due to the fact that we have a number of company-wide positions that are not here due to research conditions or concessions, that is, our prospecting work, and are not activated in the balance sheet. If we look at the period's cash flow, it goes up to SEK 317 million for the quarter and SEK 247 million for the half of the year 2024. Vi har positiva kassaflöden för perioderna på grund av den nyemission som genomfördes i juni. Om vi sen går över till balansräkningen, då ser vi återigen vår stora post som är prospekterings- och utvärderingstillgångar. Den ligger nu på drygt en miljard vid utgången av juni i år. Att jämföra med 776 miljoner samma period förra året. And that means that we have activated the last 12 months, another about 270 million. We have sent a post of 55 million regarding ongoing new facilities. And here it is only now ongoing investments that are primarily within infrastructure for both electricity and construction power. It is also part of the permanent water cleaning. And it is also parts of the kindergarten that we intend to build, which will be completed by 2026. If we look at liquid funds, it goes up to 514 million per last June, and its own capital goes up to roughly 1.6 billion. The difference, on the other hand, in the previous year is mainly new emissions. If we go back to prospecting and valuation opportunities, which I have mentioned is our individual largest post, then we have a little more details about this post. Here we are ready to show outfall quarterly from 2021 to the second quarter of the year. And here we see then continue precisely according to the plan this successive uptrend with the highest quarter with 92 million in activated opportunities for the current quarter. And what do these posts consist of? Well, the absolute largest post is connected to geology. We have invested a lot of time, resources and drilling, mapping and analysis afterwards. We mainly drill what we call mine-close drilling, that is, work for the FS work, our feasibility study. Men vi gör även en del prospekteringsborrning utöver det. Bortsett från geologi så har vi givetvis förberedande arbeten inom alla andra verksamhetsområden. Här handlar det om gruvplanering, det är analyser och processtester för kommande anrikningsverk. Vi har förberedande arbeten inom såväl infrastruktur som logistik. Vi har en ökning kopplat till projektadministration, såsom arbetsmiljö, säkerhetsrutiner, inköpsprocesser och så vidare, och inte minst inom miljösidan med våra tillståndsprocesser. Allt det här är fokuserat för att komma i mål med vår finala FS i mitten på december i år. Därmed lämnar jag ordet tillbaka till Jörgen.

speaker
Jörgen Olsson
CEO

Thank you so much, Frida. And finally, now we are on the move. The operation management has made it possible to start our project. We are on the move with full power since August 1st. We continue our dialogues with the owners in the complaint process, with the goal of maintaining a power-rich state towards the end of the year. Det fortsätter det spännande arbetet som ni fick höra om i förra kvartalsrapporten om granviskaria, alltså potentialen i hela vår resurs. Bearbetningskonstruktionerna som täcker området som vi nu får sätta igång, gruvbrytning, är alltså bara 2% av hela vårt undersökning till sådans område som har väldigt spännande förutsättningar för fortsatta finnande av att uttrycka kopparresursen. Vi är otroligt glada och stolta över det fortsatta finansiella stöd som vi får både från nya institutionella ägare och även naturligtvis befintliga institutionella och stora aktieägare. Sammanfattningsvis, vi fortsätter med vårt plan att kunna återöppna Viskari-gruvan och producera vårt första kopparkoncentrat mot slutet av 2026. Med detta, Mikael, lämnar jag ordet tillbaka till dig och till studion.

speaker
Mikael
Host / Interviewer

Thank you so much, Jörgen. I think I'll start with what you were able to present in the last quarter's report, and that is the environmental condition. You expected that it would be a complaint, so it has been done. The last answer, at least for the blank complaint, is today. But I assume that your complaint is not blank. What did it contain?

speaker
Jörgen Olsson
CEO

It is posted today on our portal. Just as the name suggests, you go up in a court negotiation, an environmental court negotiation. A negotiation is that you negotiate between different parties. It also means a giving and taking. And that can be read quite clearly in the verdict. The verdict is on 326 pages. It's an extensive package of conditions where we have to show consideration to all kinds of business owners. It's not just about the Sami villages, it's about the municipality residents, about the municipality, about the county council, about the nature protection authorities, environmental agencies. It's a matter of course. When the judge is accused, and we have received a lot of things, but we have also been given a lot of things in this will package. When such a judge is accused, then it belongs to the rules of the game. Of course, then we go back to all the things that we actually wanted to have from the beginning. To take it up on the table again. Of course, we hope that we, together with other things, will agree. So that this does not go on to the next instance. Alternatively, that the Land and Environment Commission does not give us or any other property owner a trial. So we can say that we go back to our starting position, because that is the rule of the game in such a negotiation.

speaker
Mikael
Host / Interviewer

How do you calculate that the result from your own complaint will play out?

speaker
Jörgen Olsson
CEO

Well, we believe much more in the judgment that it looked like on the 6th of May. With those conditions to our advantage and to our disadvantage. And we thought it was a good judgment. And we're ready to live with it. But if it were to be like that, that it would be a trial for a new negotiation, then you have to go back to where we started. Because you can't just give a lot and then... Should you give more and more? It's a bit of a game rule.

speaker
Mikael
Host / Interviewer

If I go on and talk a little about the new emission that you have been able to do during the quarter, it is about 440 million kronor. This new emission was targeted and what I am interested in knowing is that when you now have environmental conditions and when you now have this clear plan to reopen the mine in 2026, how did the interest from investors compare? Small as big but also old as new in the shareholder book?

speaker
Jörgen Olsson
CEO

No, but it was quite a big difference this time after our environmental status. So it means greater interest and a very fast process, a very short and fast process. And it has been challenging before to get an institutional interest, because you think it's too much risk. But is it possible to get a global status? Så vi är väldigt klara över Sve Bank Robur, SPS stiftelsen och Ålandsbanken Fonders inträde i vårt bolag och deras stora intresse. Och det är ju naturligtvis så att de här institutionerna har vi inte träffat en minut innan emissionen utan det är ju förvaltare och institutioner som har följt oss under en tid men som väntar på vissa triggerpunkter. And the emissions were significantly exceeded. We had a full mandate from the company's board, namely to calculate for 20% of existing shares. So there was a much greater interest in the emissions, which we wrote about in our press release.

speaker
Mikael
Host / Interviewer

And these 440 million kronor, how will they be distributed? Is there any detailed plan here? Yes, Frida?

speaker
Frida Kesketalo
CFO

Yes, absolutely. We work with detailed plans here, and it's all about ensuring what we need to do and when in time, and how we should prioritize here to manage our existing resources in the best possible way. And what we can say is highly prioritized right now is our permanent water cleaning, because it is critical for us to be able to start emptying the pit in time and continue the work afterwards.

speaker
Mikael
Host / Interviewer

And then I think in terms of rejection and risks around this building nation that you are doing right now around Vattenverket, but also Framtida. And you do this under the ongoing recommendation and without a finished land community study. Can you develop a little how you resonate there?

speaker
Frida Kesketalo
CFO

Yes, absolutely. You can say that the large project financing will require a low cost and that we have reached our goal with our feasibility study. But it is also important from the project side to keep so high a pace as possible. There are also big risks in a project if it takes too long. So what we do continuously is based on existing conditions, like now, for example, with new emissions when we have a supply in the box. How do we manage those resources in the best way and put plans forward? And as we said earlier, water cleaning is a high priority. It is very Den har väldigt stor inverkan på hela projektplanen så därför väljer vi att starta upp det så fort och så snabbt som möjligt.

speaker
Mikael
Host / Interviewer

Hur mycket kommer nuvarande byggnationsplanering att kosta?

speaker
Frida Kesketalo
CFO

Vi har idag en beräknad initial CAPEX på 4,5 till 5 miljarder för hela paketet. Det är vattenrening, det är anrikning, det är restaurering i gruvan och all the rest of the infrastructure and logistics.

speaker
Mikael
Host / Interviewer

Will you then count on further funding until you can reopen in Skarja?

speaker
Frida Kesketalo
CFO

Yes, we have a plan for financing, but everything is dependent on the other conditions, not least to make the power available. But as I mentioned earlier, we are working on liquidity forecasts, liquidity planning and laying out the plan. not least from the point of view of the media.

speaker
Mikael
Host / Interviewer

If I ask the question about the salary study, Jörgen, you mentioned at the beginning of the broadcast that the current one is in the so-called final phase. What is left to do in it?

speaker
Jörgen Olsson
CEO

There are a lot of validations. For those who are involved in the prospecting and mining development companies and the mining industry, you know that Man har nästan inte råd att misslyckas med en lönsamhetsstudie. Och med det menas att det finns tyvärr för många exempel på så kallade union mining-bolag som släpper lönsamhetsstudier i för tidigt skede. De håller inte måttet på rensvenska. Om det inte blir förödande så blir det väldigt stora utmaningar. Bankerna kommer själva att tillsätta externa valideringsexperter för att se om den här lönsamhetsstudien är gjord på ett vedhäftigt sätt. Vi använder en av världens största gruvkonsultfirmer, SRK, som marknaden vet om i det här arbetet. Men lånefinansierade banker och Kreditgarantiinstitut kommer att validera den. So we are in a final validation phase, and it takes time, because the solution in the study means validation of the right process technology, the right quantum equipment, the right logistics solutions, the right supply base, relevance assessments of the detailed engineering plans. It's a comprehensive study.

speaker
Mikael
Host / Interviewer

And even if it may not be valid for external partners, I wonder if it contains enough information for you internally to be able to plan around it already today?

speaker
Jörgen Olsson
CEO

We are very safe with the status of our profitability study and that is why we also dare to go out and do these new emissions. Since it is a risk if you go out and do new emissions without having dirt on your feet. So we are very, very safe with We have been doing this for a long time.

speaker
Mikael
Host / Interviewer

What else is there to do in the procurement processes towards the end of 2024?

speaker
Jörgen Olsson
CEO

In the access process, we have an active dialogue with different parties. Of course, an active dialogue with the court as well, in order to hear what we can do. The court has absolutely no interest in taking part in the negotiations either. We have a good justice system in Sweden, a good environmental justice system. Many think it takes time, it's time-consuming. But you have to be careful with one thing. It should be quite time-consuming to open a pit. You are in a position to, for many, many years, break into nature, make groundwater reductions, affect flora and fauna. It is an incredibly responsible project. It will take some time. Otherwise, you will have to work on something else if you are not prepared for it. But we have to have active dialogue with everyone. Because this, just as we say in our environmental negotiations in the Market and Environment Council, this is a project that should be able to work in cooperation, in coexistence with other business owners around the world. Municipal residents, the municipality, tourists, Fritidsaktiviteter, men även då samerbyen och rennäringen. Så det är mängder med dialog.

speaker
Mikael
Host / Interviewer

Jörgen, det var alla mina frågor men jag ska såklart också vända mig till chatten för det har kommit in en tittarfråga och den ställer följande fråga. Hur ska ni kunna transportera på Malmbanan när det är trångt på spåret och LKAB menar att de behöver tider för körning?

speaker
Jörgen Olsson
CEO

There is no shortage of time on Malmbanan and this dialogue is quite complex. Frida came directly from the company LKAB Malmö Trafik and our infrastructure and logistics manager Thomas Norma came directly from LKAB's infrastructure and logistics unit. So we want to say that we are very insightful and have good information and competence about the situation on Malmbanan. That maintenance on Malmbanan needs... I think we all agree on that. We are going to ship one train a week. LKAB has as many as 15 train stations reserved per day. And then you use much less just in the current situation. You have a lot of other different challenges. But there is room for manpower today. In our traffic.

speaker
Mikael
Host / Interviewer

It is important to keep a good relationship with your neighbors.

speaker
Jörgen Olsson
CEO

Absolutely very important. And it is a matter of course.

speaker
Mikael
Host / Interviewer

Jörgen Olsson, CEO, Frida Kaskitalo, financial manager, thank you for being here and presenting and of course answering our questions.

speaker
Jörgen Olsson
CEO

Thank you Mikael, and we look forward to seeing you next quarter.

speaker
Mikael
Host / Interviewer

We also want to thank our viewers for being here and listening.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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