Boliden AB (BOL.ST), a leading metal mining company, released its third-quarter results for 2024, showcasing a significant increase in production and improved metal prices. CEO Mikael Staffas highlighted the record mill output at the Garpenberg mine and the ongoing progress of key projects.

Despite high investments leading to a negative cash flow, the company reported a substantial operating profit and a notable rise in earnings per share. The quarter also saw increased CO2 emissions and challenges in reducing sick leave rates.

Key Takeaways

• Record production at Garpenberg mine, with a mill output reaching new highs.
• Operating profit just below SEK 3 billion, with a negative cash flow of SEK 0.5 billion due to substantial investments.
• Earnings per share increased to SEK 8.34, marking a nearly 70% year-over-year rise.
• Base metal prices improved, with precious metals reaching all-time highs.
• Total production increased with strong outputs in cathodes and nickel.
• Capital expenditure guidance maintained at SEK 15.5 billion for 2023 and SEK 13.5 billion for 2024.

Company Outlook

• Kristineberg Rävliden project set to start commissioning in early 2025.
• Tara mine reopening on track, with production ramping up.
• Odda expansion expected to reach 200,000 tons per year by Q1 2025.
• No planned maintenance stops in Q4.
• Anticipate a negative €25 million result from Tara project in Q4.
• Grade guidance for 2024 reiterated with adjustments for the Boliden area.
• Environmental permit at Garpenberg remains a bottleneck, limiting Q4 production to approximately 780,000 tons.

Bearish Highlights

• Negative cash flow of SEK 0.5 billion due to high investments.
• Increase in CO2 emissions attributed to the Aitik project.
• Challenges in reducing sick leave rates.
• Sustainability challenges in nickel production.

Bullish Highlights

• Improved prices and production year-over-year.
• Precious metals at all-time high prices.
• Strong outputs in copper cathodes and nickel.
• Mines generating over EUR 2 billion, with significant increases in prices and volumes.

Misses

• Quarter performance impacted by maintenance stops and minor disturbances at the Bergsoe project.
• Costs rose by SEK 287 million due to higher variable costs associated with increased production volumes.

Q&A Highlights

• Aitik projected to see the lowest grades in 2025 before improving.
• Garpenberg permit application expected to be submitted within the current quarter, aiming for 2024 approval.
• Review of Kevitsa mine ongoing, with a plan expected late this year or early next year.
• Annual contracts for copper and zinc pricing negotiated in late 2023 for 2024, with current spot market for TCs low.
• SEK935 million in insurance income anticipated to be booked in Q4.

The earnings call emphasized Boliden’s strong operational performance and the strategic advancements in its key mining projects. The company’s financial results reflect the positive impact of increased production volumes and higher metal prices, despite the challenges faced in terms of increased costs and sustainability issues. Boliden’s outlook for the coming quarters remains cautiously optimistic, with several projects in the pipeline expected to contribute to future growth and profitability.

InvestingPro Insights

Boliden AB’s strong operational performance and strategic advancements in key mining projects are reflected in its financial metrics and market position. According to InvestingPro data, the company boasts a market capitalization of $8.86 billion, underscoring its significant presence in the metals and mining industry.

The company’s P/E ratio of 12.05 suggests that investors are paying a reasonable price for its earnings, which aligns with the reported increase in earnings per share to SEK 8.34 in the latest quarter. This valuation is particularly interesting given Boliden’s strong financial performance and the record production levels at the Garpenberg mine.

InvestingPro Tips highlight that Boliden has maintained dividend payments for 19 consecutive years, with a current dividend yield of 4.51%. This consistent dividend policy may be attractive to income-focused investors, especially considering the company’s ability to generate profits even in challenging market conditions.

The company’s revenue for the last twelve months stands at $7.68 billion, with a quarterly revenue growth of 23.35% in Q2 2024. This growth is consistent with the reported improvements in metal prices and increased production volumes mentioned in the earnings call.

It’s worth noting that while Boliden faces some challenges, such as increased CO2 emissions and sustainability issues in nickel production, InvestingPro Tips indicate that the stock generally trades with low price volatility. This characteristic may appeal to investors seeking stability in the cyclical mining sector.

For readers interested in a more comprehensive analysis, InvestingPro offers 5 additional tips for Boliden AB, providing deeper insights into the company’s financial health and market position.

Full transcript – Boliden AB ADR (BDNNY) Q3 2024:

Olof Grenmark: Ladies and gentlemen, I’d like to welcome you to Boliden’s Q3 2024 Results Presentation. My name is Olof Grenmark and I am 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 we will start here in Stockholm, which I will moderate and then we will go on to questions on the web. Mikael, welcome.

Mikael Staffas: Thank you, Olof, and good morning, everybody, here in Stockholm and also online. And welcome to Stockholm that today is maybe a little bit of a grayish weather, but what I think is a pretty good and strong performance that we have today. So let me just start and get right into the highlights of the report that we’re presenting right now. First of all, we have improved prices and terms compared to last year. Compared to last quarter, they are about the same. They’ve been changing around during the quarter and ended up on a relatively high level at the end of September. We have improved production, especially in mines, but also in smelters, and we have a record mill production in Garpenberg actually for the second quarter in a row. This has now gotten so well and so well under well in Garpenberg that it’s actually now the environmental permit that is our limiting factor for production in Garpenberg, and I’ll come back to that question when we look at the outlook going forward. The key projects that we have are all well underway. The other project, of course, had a adjustment of the time plan and the CapEx that we came up with a couple of weeks back, but that now revised plan is still standing. Together with that, the IT project is very near to completion. It’s very little that’s left and it looks very, very good and we are having that through the last inspections there, and we are very confident that we will reach the full functionality that we wanted to get from the dam in Aitik. The project in Kristineberg, Rävliden is also moving along nicely for a commissioning and startup late first quarter or early second quarter next year. Then the two very new products that we have is, of course, early days to tell, but so far, so good, both in the tank house project in Rönnskär and in the PACE project in the Boliden area. The restart of the Tara is also moving according to plan. We had our first blast last week, and everybody is now who is supposed to be back, is now back on the roster and back at work and the production is now ramping up during the rest of Q4 for full production in Q1 with the new revised production targets that we have. We have also – during the quarter, we have submitted an application for a mining concession in Laver and we’ll see how long that will take this time to get that one through. The financial performance in the quarter, I would say, is very nice. We’ve had an operating profit of just SEK1 million shy of SEK3 billion. The cash flow is still negative on about SEK0.5 billion, given the high investment rate that we are having and we’ve also been tying some working capital within the quarter. The CapEx of a little bit more than SEK3 billion is in line with the total guidance for the year of SEK15.5 billion. On the key projects, just an update. On the Odda expansion, we will already during Q1 next year, be able to go back up to 200 to 200,000 tons per year, because we will have the new foundry and the new tank house in place, which means that we can run the old roaster in full speed and be able to get that through. But the one that is time limiting is the new roaster, which is the one that is scheduled to be commissioned in late Q1 that’s going on and that’s when we will get up to the 350 speed when we have the new roaster in place. The IT reinforcement is moving on, as I said before, very nicely. It’s planned to be completed in the end of this year. And it looks very, very good. There are only very small minor things left and then the final inspections on the quality of the new dam. The Kristineberg expansion, as I said, we are already doing some production from the Rävliden deposit, however, through the old infrastructure. The new infrastructure is online to get commissioned late Q1, early Q2 next year. The tank house, as I said, very early days so far. The groundwork has started. You see this here in the picture on the slide, where it’s going to be and how we have started with the earthwork and the ramp up is scheduled for the second half of 2016 – 2026, sorry. The Boliden area extension with the PACE project and the tailings management, the ground work has started there as well and that’s also moving on nicely and the Tara reopening, we have all the people back and onboarded again. We have gotten all the kind of paperwork done that we need with authority and we had the first blast last week and the mill production is going to ramp up a little bit during this quarter, but basically going forward from next quarter. On the ESG side, the CO2 emissions are up compared to last year. This is actually according to budget and is it below the budget. And the main reason why this is going up is the Aitik project, which has of course led to lots of diesel consumption related to those movements of material. The LTI frequency is also nothing that we are really proud of in that sense that we’ve once again a relatively weak quarter on that. We are working hard to try to reverse this trend that we are seeing right now. We don’t have a very quick fix. If we were to have one, we would have fixed it a long time ago. But we have several leads that we are working on and trying to make sure that we come back on the positive trend that we had for such a long time. The sick leave is very stable on a level which we consider too high. We wanted to get down to the levels that we had pre-COVID, which was around 4%, but we seem to have difficulties coming down all the way down there. This is not unique to us. It’s many other companies around where we operate have similar issues. And I think that’s something that we are going to work on. But still the ambition is to get back to pre-COVID levels as soon as they were possible. On the market side, while the base metal prices have improved, they have improved clearly versus last year and then they improved during the quarter as well. The precious metal prices are at all-time high. And it’s of course improving versus both periods that we are looking at. The spot TCs are weak for both copper and zinc. This is not affecting us so much. As you know, we have the majority of our feed coming through benchmark. So it has an effect as much in the quarter, I should say. And we have a slightly weaker U.S. dollar. And here, you can see in the graph how the total index that we have for prices and terms is developing. If you look on the main metals that we have, our three main metals, you can see both in copper and zinc, it looks like the whole world is becoming more and more cost efficient regarding mining, because the costs in basically all cost brackets of the cost curve is going down quite a lot over the last 2 years. But this is a little bit of a fake news if you want to use that word, because it’s about the high precious metal prices, gold and silver that comes as a credit in these calculations, which pushes down the prices. You can still see that copper is for many reasons, maybe good reasons still hovering quite far above the cost curve, which means that everybody in copper mining makes relatively good returns these days. Zinc that used to be down that it was difficult on the margin to make money. Now, the prices have come up a little bit and is now safely above the cost curve structure. And then you can see nickel, where the – it’s clearly an issue where something is going to have to give on the nickel side, either there will be clearly lower nickel production coming out or there will be some adjustment of nickel prices, because at the price levels that we have seen here, it’s very difficult to get nickel mining to be sustainable. If we then go to bullet and look at our production, the Aitik mine has been improving production still not really up to the level where we want it to be, but it’s coming up and the ramping up of Liikavaara coming although a little bit slow, but it’s still coming. The grade right around where we have guided it to be, Garpenberg, record mill volume. It’s been a very good production quarter, grades around where they should be. Kevitsa, 2.5 million tons, a little bit less than last year, but you know that the permit in Kevitsa is 10 million tons. So, 2.5 million is right on the permit level, even though you can play between different quarters. So, stable production around this capacity and grades around where they should be, clearly stronger than last year’s low grades. The Boliden area is the very strong performer this quarter. We had a very strong production. We have record for gold production coming out of the Kankberg mine in general and very strong grades and throughput coming out of the Boliden area. In Tara, there was no production during the quarter, as I said, but we did have the first blast coming here. Moving over to the smelters, Rönnskär has had a series of smaller kind of disturbances, especially in the lead line, but everything is integrated, so it kind of spreads across. It is a challenge to run the place like Rönnskär without the tank house. Harjavalta, very strong production, strong cathode production around this and basically generate good production in Harjavalta also nickel doing good in Harjavalta. In Kokkola, I would say outstanding overall equipment efficiency, very good availability and a very good production coming out of Kokkola. Odda has had some challenges. Partially, it’s due to the tank house 4 that is permanently closed linked to the project, but also having a maintenance stop. And then on top of that, you have a project next door that is working all the time makes it a little bit difficult to maybe be totally focused on production all the time. So, the quarter was not stellar. Bergsoe has also had several minor disturbances during the quarter. But if you look on total production, you see that we are going up both on copper cathodes and nickel production is also very strong. With that, I’ll leave it over to you, Håkan, to talk a little bit about financial summary.

Håkan Gabrielsson: Thank you, Mikael and good morning. As Mikael already said, we are reporting EBIT result excluding process inventory of SEK299 million, so just shy of SEK3 billion. This is an improvement of about SEK1 billion compared to both comparison periods, then adjusting for the one-offs that we had in Q2 relating to insurances. Free cash flow, a negative SEK0.5 billion, I’ll come back to that and earnings per share, SEK8.34, which is close to a 70% increase compared to last year. Breaking down the performance by business area, it’s evident that we primarily had a very good quarter in mines, reaching in excess of EUR2 billion. In there, in particular, I’d like to highlight Garpenberg and Boliden area that contributed very much to this increase, solid quarter in smelters and relatively small movements in the eliminations adding up to close to SEK3 billion. Moving on then to the comparisons quarter-to-quarter and this is comparing Q3 this year to Q3 of last year. Prices and terms are up SEK400 million. In there, there is an increase of metal prices, I think up to SEK1.1 billion, where precious metals, gold, silver, have had a good run, also copper and zinc, which is then partly offset by lower premiums, lower TCs and lower exchange rates. Moving on to volumes, we see an increase of SEK1.1 billion. Out of that, mines correspond or add up to SEK800 million, out of those SEK1.1 billion and we see improvements across the lines, it’s higher grades, it’s some inventory reductions, it’s stronger mill production. So a strong quarter of mines, but also an improvement on the smelting side. And there, we highlight in particular the performance of the Finnish smelters, Kokkola and Harjavalta, they had a good quarter. On the cost side, we have a negative impact of SEK287 million. And of course, with that volume increase, there is some variable costs coming together with that. So that is one part of that. We have also had some general increases in a few of our sites. In Rönnskär, for example, we have comparing to last year, higher cost for the whole anode handling process, which is a result of the new business model that we are running. In Aitik, some costs connected to the Liikavaara startup and in Odda as well, but in general, mostly a cost movement related to volumes. Moving on to a sequential comparison with Q2 of this year. As you can see, the impact from prices and terms is very limited, SEK83 million, so a small change there. We’ve had slightly lower metal prices, but slightly higher byproduct prices, but again, small movements. Volumes, up SEK560 million. We have had higher volumes in smelters due to larger maintenance stops in Q2. But again, most of this increase is in mines where we have higher mill volume and improved grades, I mean, in particular, Garpenberg and in Boliden area, performing well. Costs are about SEK600 million lower than the previous quarter. There is a significant element of seasonality, which is slightly more than SEK200 million that would typically spend less in any given Q3 due to vacation periods. But there is also an effect of lower maintenance. Q2 was a quarter with fairly sizable planned maintenance stops in the smelting side that we didn’t have in Q3 to the same extent. And then a big chunk here, which is related to items affecting comparability, and that was two big items affecting Q2, the insurance income in Rönnskär and then on the negative side, some restructuring in Tara. Moving on to cash flow, I think I’ve covered the operating profit side. Working capital, we are tying about SEK1.4 billion. Out of that, about SEK0.5 billion is a function of price movements and the remainder is a volume increase. In the cash flow, I should also highlight that we have a positive effect of about SEK200 million from insurance payments that we have, insurance considerations that we have received in the quarter. CapEx is a number that is in line with what we guided for the full year and then it adds up to a negative SEK0.5 billion for the quarter. Moving on to capital structure, fairly similar to the recent quarters, we are at a net debt to equity of 24%, which is slightly higher than the years 2020 to 2022, but not starting out so much if you look further back in of the company, still strong payment capacity of just over SEK12 billion, so a balance sheet in good shape. So with that, you want to take it.

Mikael Staffas: Thank you, Håkan. Just very briefly at the Capital Markets Day you know about, it’s going to be held in Odda. We are going to show off the brand new smelter to you all guys. It is the actual capital market information will happen in Bergen and then we will make the excursion to Odda later that first evening and on the next day. I think that you all – or in fact, you should have gotten a separate invitation. If you haven’t, you can contact Investor Relations at Boliden and get that in place. It’s getting to be relatively full, relatively quickly. So, if you – especially if you want to go to the Odda excursion, you should not wait too long to get in there. Now, regarding outlook, let’s go through this one step by step. Number one, CapEx, we came up with this one a couple of weeks back. There are no changes, SEK13.5 billion next year, SEK15.5 billion for this year. Regarding maintenance, we will not have any planned maintenance in Q4. There should be no change in any way. We have the insurance income that we just wrote in. We got out of that last SEK1 billion that we expected, we got SEK935 million confirmed by the insurance company just a few days back, and that will affect Q4 as a number. Someone can argue where the last 65, while there are lots of things in and out within insurance, and we are not done with that totally, but that – this is what we have received as a confirmation as of right now. Tara will continue to run negative through Q4. We can see basically we have now full costs, but we will not have full production and we are expecting a negative €25 million result in the quarter. Now regarding grades, you can see here that we are reiterating the 2024 grades across the board, except for the Boliden area, where we are guiding up a little bit regarding the grades and that’s because some of you will have made the math that if you wouldn’t do that, there was basically no grades left for Q4 as there has been so strong grades actually throughout the year in the Boliden area. We although have relatively weak – if you make the math here, even though we are guiding up the grade, we will have a relatively weak Q4 regarding grades in the Boliden area as we will have to mine the weaker areas as well that we haven’t mined so much of during the earlier part of the year. We should also say regarding Garpenberg, and I pointed that out that now the environmental permit is now the bottleneck, the environmental permit is 3.5 million tons and we will not be able to get any kind of exemption from that, which means that we can only do about 780,000 or so tons in Q4, which would be a lowering. We have, as I said before, we have initiated a process to increase the permit in Garpenberg so that the permit will not be the bottleneck for production, but actually the production will be the bottleneck for production. This is a process we have initiated. We have ambitions to get that in during the end of this year and to get that permit during next year, so that next year, the 3.5 should not be the bottleneck. However, you can never be sure, either on the result of such a test or on the exact timing of it, but right now, 3.5 is a bottleneck and that will affect Q4 negatively. Looking then into the grades of next year, I don’t think there should be any major surprises here to anybody. We are having one more year of low grades in Aitik, which I think is in line with what has been guided before. Garpenberg is coming along, but as always told, in these underground mines where we are mining clearly above the average, the R&R statement, we will slowly come down according to the bits and pieces. In the Boliden area, you can say it’s not really that much changes. Boliden areas should be no question. In Kevitsa, we have not guided yet, that’s because we are doing a review of the plans in Kevitsa both related to dam construction and how the dam construction will play in, what kind of parts we have, but also with some geological information and also a potential how we will play it to keep the option of a potential pushback 5 live. Maybe we can postpone the actual decision, but we will keep the option live further out. All this is a relatively big equation that might also affect the grades for next year and we’ll get back to you once we have gotten those things under control in a separate communication. So with that, I will then leave the floor to you Olof.

A – Olof Grenmark: Yes, ladies and gentlemen, that opens up our Q&A session here in Stockholm, and we will start with Johannes Grunselius, the Norske Bank, please.

Johannes Grunselius: Thanks. It’s Johannes Grunselius here at DNB. Can I start off by asking about the grade guidance, ‘25 Aitik, it’s 0.16. I was more under the impression that ‘24 will be the low point here. Then you have Liikavaara, which is a blend of, is it one-fifth, which comes with rich ore. So can you elaborate a bit on that? And you also mentioned that this is the last year with low grades in Aitik, if you can give us any color beyond ‘25?

Mikael Staffas: I cannot really give you any color beyond what we gave on the Capital Markets Day. That’s the latest information is out. And if you read that graph, it’s pretty clear that there are three pretty low years, which ‘25 will be the lowest and ‘26, it starts a little bit of a pickup. I have no further guidance on top of that. So, we will come back to guiding exactly how that return should be. But as we always said that since we have an average in the R&R statement of 0.23, of course, at some stage, we’ll come back, not just to ‘23, but also above ‘23.

Johannes Grunselius: And a second question on the ore, if you can give us any sort of color, what do you think about – I think, the design is 45%, right, and you’re running at 40%, if you see that as achievable for the next few quarters?

Mikael Staffas: Yes, the design is at 45%, you’re absolutely right. And we have – this year – this quarter we have basically 41% as a pace. They should be able to pick up some of these issues that we have had with the startup of Liikavaara should be behind us that is helping on the amount of tons. So it should be coming up. But you are absolutely right, we’ve had – we’ve been struggling to reach the 45% when it comes to consistent way, even though we’ve had 45% at individual quarters.

Johannes Grunselius: Thank you.

Olof Grenmark: Ola Soedermark, Kepler Cheuvreux.

Ola Soedermark: Yes, good morning. Just a follow-up on Aitik, is it possible to quantify the – I mean, the impact of ramping up Liikavaara and also the construction of the improved TAM facilities you have there. I assume it has impacted the total volume of the mine?

Mikael Staffas: Yes, but the effect is more indirect. It’s true that there has been some competition for trucking capacity, which has been negative for the mine and that should kind of come away. And there has also been a little bit when you have lots of activities in certain areas, of course, you run the risk of kind of being in the way of each other. So, at the end of the dam project should, on the margin, will be positive also for the mine production.

Ola Soedermark: And a follow-up on the Garpenberg mine and the new permit you have there, what timing – I know it’s impossible to say, but with your experience and so on?

Mikael Staffas: Well, number one, it’s not a brand new permit. It is an alternation of the existing permit, which is good in terms of timing. What we can control is to get all the preparations done that needs to be done to get it in, including as those of you who read Swedish newspaper know that we have public consultation, quite a few of them during the fall, which is out there. Our ambition is to get the actual application in within the next few weeks, clearly, within this quarter. Then we think that we will get the permit and we think we are going to get it at SEK4.5 million, but you never know and we think we are going to get during next year so that it will not be limiting factor for 2025, but we can never be 100% sure until we get it.

Ola Soedermark: Thank you.

Olof Grenmark: Christian Kopfer, Handelsbanken, please.

Christian Kopfer: Alright. Thank you very much. Couple of questions. Follow-up on Olof’s question on Garpenberg, new permit probably during next year, what kind of investments are we talking about to get there? Is it – I guess, it’s primarily debottlenecking CapEx or…

Mikael Staffas: Now just to be very clear, we are applying for a bigger permit to make sure that 3.5% is not a bottleneck for us. And the number 4.5% is picked in the sense that that’s a number which is big enough, so it should not be really be a bottleneck, but it’s still small enough that we can do it within an alternation of the existing permit, not having to apply for a brand-new permit. Those are the kind of parameters. We have not yet said anything about exactly how much we are going to produce or whether we will do any investments to get to a higher level. We are just saying that we want to get the 3.5 away as a bottleneck, because clearly, we can produce 3.5% or maybe 3.6% or 3.7% with the existing infrastructure that we have, that’s what we’ve proven this year. I mean without any limits, we should probably have reached whatever 3.6% for the year. So, that’s more – there is more about that making sure that we can utilize what we have. And then of course, we can think about expansions, but we have not yet communicated any of that.

Christian Kopfer: Yes. But when it comes to expansion up to say, 4.5 million tons, could you do that with the bottlenecking CapEx or do you need another line in the mill or how does it?

Mikael Staffas: Most likely, the mill can be done by debottlenecking, but the big problem is the shaft and how to get the ore up. That’s the one that’s very close to capacity today and we are looking into that. And here, there are many things that play in here, because we will need a second shaft in Garpenberg anyway, even for the same production at some stage, because the mine is getting deeper and deeper. So we need to get deeper with the shaft. But exactly how these things play out and when, it’s too early to tell.

Christian Kopfer: Alright. On Tara, how – so let’s just assume that everything looks, I mean, the byproduct Tara is lagged right?

Mikael Staffas: Yes.

Christian Kopfer: Alright. So if you assume current land price, what kind of C1 cash cost do you think Tara will be 2025?

Mikael Staffas: $1.

Christian Kopfer: $1, okay.

Mikael Staffas: We have even guided for this, Christian, so it’s out there.

Christian Kopfer: Alright. Sorry for that.

Olof Grenmark: Any other questions here in Stockholm, please. No more – just one more from Johannes here with the Norske Bank.

Johannes Grunselius: Just want to take another question, could you give some color on what you see in pricing for the smelters. I mean we know about the weakness in Asia and the risk that it is spilling over and when – just to remind us, when is the next sort of quarter when you will go on new annual contracts, that’s more in the second quarter next year, right?

Mikael Staffas: Well, I mean, the contracts are for copper negotiated typically in November and then good as of January 1, the annual benchmark contracts. On the zinc side, they are typically negotiated in February and March, but then retroactively effective as of January 1. Then we always have some inventory typically a month or 6 weeks or so on that is price – that is delivered before the end of the year and that’s priced according to the previous year’s benchmark that we will then consume during the first half of the first quarter, both for copper and for zinc. So that’s the way the mechanics work out.

Johannes Grunselius: And what did you see in the spot market in Europe? Was that a major weakness or was it more stability?

Mikael Staffas: Now, that the spot market in terms of TCs is a global market. And there, those TCs are very low, very, very low spot TCs. How that will play into the benchmark negotiations, I don’t know, it’s – we are not part of that. What is more European locally are the premiums? And the premiums are on a stable, relatively low level, but as Håkan pointed out compared to last year, they are lower. They are not moving that much in terms of the premiums will be my guess right now. And then we have the byproducts that are also relatively stable on a maybe too low level.

Johannes Grunselius: Thanks.

Olof Grenmark: Okay. Operator, then we will open up for questions over the phone, please.

Operator: [Operator Instructions] The next question comes from Liam Fitzpatrick from Deutsche Bank. Please go ahead.

Liam Fitzpatrick: Good morning. Two questions for me. The first one on Kevitsa and then second on M&A. On Kevitsa, I appreciate the review is underway, so there is not too much you can say at this point, but can you give us a little bit of directional guidance in terms of when you think it will be complete and based on the decision whether you go ahead or not with the pushback, what that is likely to mean for grades versus this year or versus reserve grade? And then can you give any high-level kind of CapEx guide for the pushback. I think historically, it was talked at around SEK3 billion to SEK4 billion. That’s the first set of questions. And then secondly, on M&A, I know you won’t comment on specific assets or processes, but are you on the lookout for opportunistic acquisitions, or are you very much focused on your internal organic options? Thank you.

Mikael Staffas: And I will start with the second one and say that we are, and as you know, mainly focused on our internal options we have apart from the investments we are already doing we have maybe a handful of potential options that we are playing with going forward. And that is our focus, and that’s what we historically have created most value. Having said that, it doesn’t mean that we are not looking when things show up, we will be looking, but beyond that, I have no other comments. Regarding Kevitsa, Kevitsa, we are hoping to get either late this year or early next year to come out with the right plan just with a clear around that. There are quite a few moving parts. Those of you who read the R&R statement last year know that we had to take about 5 years out of the reserves and put them into resources because of the dam – permit issue and dam construction issue that we had in Kevitsa. That in itself is a kind of interesting thing to work around, it looks quite positive and it sounds that we able to sort that out, but we knew that need to be done, that has consequences for mining sequences in itself. And then we also have the potential for a pushback 5. And here, the idea is just to be very clear. It’s not that you should expect that suddenly there is a decision to pushback 5 coming in the next few months. No, we are working on keeping that option alive and keeping the option alive in the sense that we can maybe decide later, the later we can decide the better, because as you all know, the nickel price is a relatively difficult thing to forecast, especially at this time. And therefore, I will not speculate on the other parts around how much would it be and when would it come and all these things. That’s way too early.

Liam Fitzpatrick: Could you comment on if you delay – let’s assume you delayed pushback 5 for all of next year, directionally, what could that mean for grades in 2025?

Mikael Staffas: Well, I can not to talk about it because one thing is the pushback 5, yes, those options, another thing is also to get access to some material, how to get access to actually waste material or a net waste material that we use for dam construction, which is another kind of more interesting part of this whole mining sequence.

Liam Fitzpatrick: Okay. Alright. Thank you.

Operator: [Operator Instructions] Please go ahead.

Adrian Gilani: Hi. It’s Adrian here at ABG. A couple of questions from me. First of all, a follow-up on the Garpenberg permit. I guess how confident are you that the increased permit will be in place at the start of 2025? Is there a high uncertainty of you not getting it?

Mikael Staffas: It will not be in place in the beginning in 2025, but it’s enough that it comes in place during 2025 that we can produce 2025. So, we will most likely assume that it’s going to happen to 2025 and produce without any limitations in the beginning of the year. And if it doesn’t come during 2025, we will have a relatively slow second half of the year. That’s the reality of how things will work out. How confident, we feel good about it, but there is – it’s impossible to put any number on those things.

Adrian Gilani: Okay. I understand. And then also a follow-up on the TC benchmarks, I mean we are seeing some reports that TC terms could be as low as sort of $20 to $30 per ton for the copper benchmark for next year. Would you say that this is roughly in line with sort of what you are hearing as well?

Mikael Staffas: I cannot speculate at that. We are not at the table and the numbers that come out can have all kind of implication for negotiation tactics and other things at those tables. So, I care not to speculate until we get the numbers out.

Adrian Gilani: Okay. I understand. And just a final housekeeping question. The SEK935 million in insurance income that will be booked in Q4, do you have a timeline for when that will be paid out?

Håkan Gabrielsson: As of today, we don’t have a timeline. We received the confirmation of the amount just a couple of days back, and the next step is to sit down and schedule the payment plan. I don’t expect much of an impact on this year, but we will come back to the outlook of the totality for next year.

Adrian Gilani: Okay. Perfect. That’s all for me. So, thank you.

Operator: The next question comes from Ioannis Masvoulas from Morgan Stanley. Please go ahead.

Ioannis Masvoulas: Thank you very much for the presentation. A few questions left from my side. First, on the other expansion, with regards to the commissioning delay that you have indicated for the project, what sort of earnings contribution shall we expect for 2025? I think at the full run rate and using commodity price inputs as of September, you were indicating that €150 million at the full run rate is still the right number. Shall we assume half of that for the full year of ‘25 or more or less an indication would be very helpful? Thank you.

Mikael Staffas: I am really taking this on the top of my head, but the number for the full year effect is still true. It hasn’t changed. Exactly how much – exactly what the ramp-up curve will be still a little bit unclear, so clear not to expect there exactly on that. But the kind of full year effect is still the one that we have indicated.

Ioannis Masvoulas: Understood. Thank you. Second question on Laver, you have submitted an application for a mining concession. When do you expect a decision here and assuming the outcome is positive, how long could the entire permitting process take before you can actually break ground for this project?

Mikael Staffas: That’s an interesting question that has many potential outcomes. I think that – if I were to guess, when we are speaking in 12 months, we will have a mining concession. This is both that we will get the mining concession and the rough indication of the timing it could take another 12 months from now. It could take less, it could take more. We are not in control of the process. It’s as you know, a new law in Sweden is the first time that, that new law is supplied. So, we will see what they won’t tail. Once we are there, things get a little bit interesting because with the new Critical Raw Materials Act, I think it’s highly likely that Laver could qualify as a strategic project, although that needs to be confirmed. And if it were to be so, you could say that the environmental permitting process should not take more than 27 months. Now, if this is really true and whether it’s really in there, and whether it moves fast, who knows. But I think that 3 years is maybe a more prudent way of looking at it, i.e., the kind of first time we could have an environmental permit in reality, it will be then late ‘28. I think that, that’s still kind of optimistic. And then we are probably not ready to move right ahead. We will probably need some discussions. So, I said otherwise, I think it’s very unlikely that we will have much of construction in the next 5 years. And then from start of construction, it’s probably 3 years until we have anything mining anything in mining there.

Ioannis Masvoulas: Very clear. Thanks for that. And just lastly on Garpenberg, Shall we think that sort of the Q3 run rate of 3.7 million, 3.8 million tons is something you can sustain assuming you get the permit, or could you even move a bit higher on that level without any incremental investments?

Mikael Staffas: I think that the first point is true. It is obvious that we should be able to do a little bit more than 3.5 tons with the just existing things. We of course, and also always looking at potential debottlenecking around Garpenberg and we will see what we will come out with as the next step once we hopefully have this permit in place, but we are not going to spend any money on any kind of investments for debottlenecking until we have the permit in place. So, we are not risking investments in Vain.

Ioannis Masvoulas: Yes. Thanks very much.

Operator: The next question comes from Amos Fletcher from Barclays. Please go ahead.

Amos Fletcher: Yes. Hi gents. I had a couple of questions. I suppose the first one is on Kevitsa and the mine plan revisions. Can you just talk us through the dynamics here? And why the mine plan is taking so long to reassess. I mean I remember in Q3 last year, you said there was no mine plan for 2025. So, just sort of find out what’s going on that. Thanks.

Mikael Staffas: Just to take you through again, the first of all, as you will recall from the R&R statement update that we did in February, there was a quite a lot of big degrade from ore reserve to resource. That was linked to dam and dam issues and dam construction issues and the assessment of the likelihood to get a dam permit on that dam plan that was in place at that time. We now have another dam plan in place that we think is going to get permitted, which was a good news. But it will require quite some material to get the dam in place. Most of that material hopefully coming internally, not having to buy it externally. That could impact the plan, the mining plan. Then the second thing that’s impacting our plan in Kevitsa is the fact that the slope angle and other things related to slope angle are a little bit tricky as we have had some problems with certain wages in the pit, and that needs to be taken care of. The third thing that is very tricky and complicated in Kevitsa is it’s not as Aitik. Just to be clear, it’s not Aitik, where you have a very kind of evenly slowly change in kind of grade in different parts of the area. Now, the ore in Kevitsa is very concentrated in certain particular places. And when to get that and how to access that and which means that the way that you choose to do a plan actually makes a big difference to the grade in the grade profile for different years and not for the totality because the totality is very relatively safe, but for different years. And all these things play together. And that’s – just to be very clear, what is happening now is that we have decided not to say anything until we have the full revised R&R statement ready, which typically gets ready in the early part of the year and is released to you guys in February. Maybe we will consider releasing it earlier in Kevitsa. Normally, the rised R&R statement doesn’t really affect the first year grades because they are in some way kind of fixed or not so much to do about. So, the first year is finished earlier, and we could then at this particular time guide for the grades even though it’s before the R&R statement is ready. In Kevitsa, that’s not the case. We have had – there are too many things that needs to be settled before we can communicate it. And it does and it – the certain choices does have an effect on the grades for ‘25.

Amos Fletcher: Okay. Very clear. And then as a follow-up, can I ask another question about CapEx, where the spend rate in Q3 went down. It means you have to spend about €5.1 billion in Q4 to meet the guidance. That’s going to be the highest on record. Is that realistic, or should we expect some CapEx to drift into 2025?

Mikael Staffas: I think you are a little bit stating that obviously there is a risk or a chance however you want to look at it as something will drift. There is quite a big chunk that is coming into Q4. So, we might see record levels. But whether we are going to get everything in that we have in our plans, something might be drifting over to next year.

Amos Fletcher: And then last one was just on working capital, slightly surprising size of the build. Have you got any expectations for what we should have seen for Q4, please?

Håkan Gabrielsson: Q4 typically is our strongest quarter when it comes to working capital. We have had a fairly high bill this quarter, but clearly less than what we typically have in Q2. So, I expect Q4 to be roughly a normal Q4, which is a working capital release. I don’t want to give a number because it’s price related and all that, but it should be released. Then if you are simulating the working capital specifically, we will be booking the insurance income. So, we will also get a SEK935 million receivable effect in the working capital for Q4. But excluding that, we should see a release.

Amos Fletcher: Got it. Thank you very much.

Operator: The next question comes from Marina Calero from RBC Capital Markets. Please go ahead.

Marina Calero: Good morning. Thanks for the call. I just have a follow-up question on Kevitsa. You mentioned the importance of the nickel price for the pushback 5 decision. Can you maybe give us a range of what sort of nickel prices you will need for that investment to meet your hurdle rates?

Mikael Staffas: No, I will not, but I will just to get a little bit of shedding light. I mean the question for Kevitsa pushback 5 is the price of metals in general between 2035 and 2045 because that’s the kind of extension we are talking about for those 10 years, and it’s about the nickel price, which is important, but it’s also by copper and PGM and gold, and that whole totality needs to work out. As you probably understood, because we haven’t made the decision yet, it’s not that if one uses a kind of ports [ph] term that this is a slam dunk. There are lots of issues in and out and ifs and buts around this. And one also given the kind of general uncertainty always with metal prices, but especially so far in advance, the further we can kind of extend this option that we can make a decision later without destroying any value and what we are doing it is, of course also creating value.

Marina Calero: Understood. Thank you very much.

Operator: The next question comes from Richard Hatch from Berenberg. Please go ahead.

Richard Hatch: Yes. Thanks and thanks very much for the call. Just a couple of follow-ups or just final point. Just on Tara throughput for ‘25, can you give us a steer as to what kind of volumes do you think is sensible to put into our numbers? First one, please?

Mikael Staffas: 1.8 million tons of throughput at 5.5 – at 5.5% zinc.

Richard Hatch: Great. Okay. Very helpful, very clear. Thanks. And the second one is just – I mean you have effectively pointed to it, but just believing grades, Q4 on my numbers, it looks like you are going to have to do about 1.5 grams gold grade to get to the 2.3% guidance. Is that correct, or do you think there is upside to that?

Mikael Staffas: No, I think you have done the math right. I will not question your math.

Richard Hatch: Okay. Thank you. And the last one is just on Garpenberg, you are talking about the expansion. Can you just talk about the TSF capacity you have got at site just in terms of the – if that’s a challenge or not?

Mikael Staffas: The existing tailing facility at the existing production levels is good until about 2034, 2035 something like that. That’s one of the considerations of kind of only asking for 4.5 is that, that still is kind of doable. It will shorten the life of mine. If we were to go to 4.5, it will shorten the life of mine of the existing tailing facility, but it’s still doable to deposit, which is of course, very important for getting the permit to be allowed to produce that you can show that you – if you were to produce on that level that you can actually handle the tailings. At some stage, there will be needed a new or extended or widened tailing facility that is work that’s ongoing. We are not nervous in a sense, but it’s of course, always kind of interest in where you are going to get a new tailing facility in place. And that will be the subject of a later permit, and that will be a new permit starting from scratch.

Richard Hatch: Okay. Got it. Thanks.

Operator: The next question comes from Daniel Major from UBS. Please go ahead.

Daniel Major: Hi. Yes. Thanks for the questions, two for me. First one, just perhaps a clarification on a couple of bridge items into Q4. Can you just confirm how much out of the insurance provision you have received as cash as SEK800 million, I think it was SEK600 million and SEK200 million, is that correct?

Håkan Gabrielsson: Exactly. The guidance that we gave, holds. So, we received SEK800 million so far, and we have SEK200 million that we are expecting for Q4 as a payment. And on the P&L side, we are expecting SEK935 as on income into the P&L of Q4.

Daniel Major: Okay. Thanks. And then second one, looking at your group quarterly bridge, SEK591 million benefit this quarter from – in the cost line, how much of that is seasonality?

Håkan Gabrielsson: We have typically said that it’s SEK200 million. When I looked into the detail numbers, I would probably round that up a bit. So, I would say 230 – SEK220 million to SEK230 million is probably a correct number. But if you want to round it to even SEK100 million, then I would say SEK200 million.

Daniel Major: Okay. And would you expect the remainder of that to be sustained in terms of that cost benefit into Q4?

Håkan Gabrielsson: Q4 is, I mean the main part of the rest is that we don’t have maintenance. So, that should be sustained until next summer. But having said that, Q4 is typically our most expensive quarter, so if you compare Q4 to the cost of any other quarter, it will be fairly high. So, I would be quite conservative in the modeling for Q4 specifically. Even though I cannot point on any single item here that is not sustainable.

Daniel Major: Okay. Thanks. And then last one, just a follow-up on Liam’s question around M&A. You normally focus on gearing, where you are 24%, I suppose, above your target, but your net debt to EBITDA is still quite low, less than 1x, if M&A were an option, can you give us any sense of how high you would be willing to go in terms of leverage for cash funded M&A and whether equity would still be an option?

Mikael Staffas: I will answer that question in very general terms, and I think we said this many times before. We are extremely uneasy whatever going over 60% gearing. We simulate a lot of what low terms look like and what really bad turns look like and what we then can afford. We can be north of 20% because we don’t really go from 20% to 60% in a normal kind of downturn, a normal downturn will be less than that. But exactly how big it is, will depend. We are very comfortable with the present 24%, and that could probably be north of that. Sometimes given the number that when we bought Kevitsa, I think it was 40% around there, and we were confident around 40% to do that acquisition. Somewhere north of that equity will start playing.

Daniel Major: Okay. So, 40% would really be what you would be comfortable going up to on the debt side? Is that right?

Mikael Staffas: It all depends. It depends also what the simulations work out on. But we have proven to be comfortable with 41% before.

Håkan Gabrielsson: But just to underline what Mikael said, we spent a lot of time simulating if we do a big investment of any kind, what would it look if we had a severe downturn immediately after that. And we want to meet our limits where we feel comfortable even in a severe downturn. So, that’s how we work it.

Mikael Staffas: And we also pointed, there are obvious ore kind. It also depends what other CapEx we have that might be non-M&A related CapEx is well placed into all these simulations.

Daniel Major: Okay. Very clear. Thanks.

Operator: [Operator Instructions] The next question comes from Liam Fitzpatrick from Deutsche Bank. Please go ahead.

Liam Fitzpatrick: Hi. Good morning. Second round here. I just wanted to follow-up on Aitik because I have also had some questions from some investors on this. I am still a little bit confused about why the grade is going down for the year-over-year, given that the Liikavaara higher-grade pit is ramping up. Is this just a short-term or access issues, is the mine plan not panning out exactly as you thought, and any color on that would be helpful.

Mikael Staffas: This is fully in our access issue around where the other warrants are. And then I have told some other people who questioned why is it 0.16 that if you put out your ruler and looked very closely into what was given at the Capital Markets Day, you can probably figure out that the best case or the expected case was 0.16 for ‘25. It depends on how sharp eyes you have. But we were of course, blurry because we didn’t know. But I can say that 0.16 is exactly according to what we thought internally all the time. And it is due to the fact, not so much Liikavaara was always planned to be full and it’s also planned to be full now for next year, but it’s the other positions in the mine that we have, especially on the south side where we are not really into and also on the new North 7, where we are not into high grades yet, we need to come down a few benches before we kind of start hitting higher grades.

Liam Fitzpatrick: Okay. Thank you.

Operator: The next question comes from Amos Fletcher from Barclays. Please go ahead.

Amos Fletcher: Yes. Thanks for the follow-up. Just another question on Aitik, do you think you need to spend more CapEx to deliver 45 million tons consistently at some stage?

Mikael Staffas: That is not our plan, because I think that it’s doable without any major CapEx. The mill is clearly ready for it. The bottleneck has been the mine and then somebody says, okay, what if you were to just put in a few more trucks and then it’s all solved. It’s not quite that easy. It has to do with availability of phases and availability of other equipment as well and that has proven to be a problem over time. And to me, it’s not really a CapEx issue.

Håkan Gabrielsson: Just – I agree with what you said Mikael. And just one addition, we have for next year already you guided for higher maintenance CapEx in Aitik and that plays important to that, but that’s already in the numbers we have communicated.

Amos Fletcher: Okay. And so do you think it’s reasonable to assume 45 for next year, or is it sort of somewhere between 2024 levels and 45?

Mikael Staffas: I would say that, that’s more reasonable. Yes.

Amos Fletcher: Okay. Thank you.

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

Mikael Staffas: Thank you, operator. I just wanted to thank all of you for bearing with us during this conference. So, I think you all – I hope that you have gotten a little bit better sense of what I think has been a very good quarter and also quite good forward outlooking statements as well, albeit be it with a little bit of a hinge to Q4. Thank you all.

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