Boliden AB Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Johannes Grunselius - DNB Markets - Analyst : Thank you. 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 year. And 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 of beyond '25?

Question: Johannes Grunselius - DNB Markets - Analyst : And a second question on the ore, if you can give us any sort of color. What do you think about -- I mean, the design is 45, right? And you're running at 40, if you see that as achievable for the next few quarters. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 7:30AM, BOL.ST - Q3 2024 Boliden AB Earnings Call

Question: Ola Soedermark - Kepler Cheuvreux - Analyst : 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 dam facilities you have there? I assume it has impacted the total volume of the mine.

Question: Ola Soedermark - Kepler Cheuvreux - Analyst : 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.

Question: Ola Soedermark - Kepler Cheuvreux - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 7:30AM, BOL.ST - Q3 2024 Boliden AB Earnings Call

Question: Johannes Grunselius - DNB Markets - Analyst : Thanks for the opportunity 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?

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

Question: Johannes Grunselius - DNB Markets - Analyst : Thanks.

Question: Liam Fitzpatrick - Deutsche Bank - Analyst : 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's 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.

Question: Liam Fitzpatrick - Deutsche Bank - Analyst : Could you comment on -- if you delay -- let's assume you delay pushback 5 for all of next year, directionally, what could that mean for grades in 2025?

Question: Liam Fitzpatrick - Deutsche Bank - Analyst : Okay. All right. Thank you.

Question: Adrian Gilani - ABG Sundal Collier ASA - Analyst : Hi, it's Adrian here at ABG. A couple of questions from my end. 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?

Question: Adrian Gilani - ABG Sundal Collier ASA - Analyst : Okay. I understand. And then, also a follow-up on the TC benchmarks. I mean, we're seeing some reports that TC terms could be as low as sort of $20 to $30 per tonne 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?

Question: Adrian Gilani - ABG Sundal Collier ASA - Analyst : 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?

Question: Adrian Gilani - ABG Sundal Collier ASA - Analyst : Okay, perfect. That was all from me, so thank you.

Question: Ioannis Masvoulas - Morgan Stanley & Co. International Plc - Analyst : Thank you very much for the presentation. A few questions left from my side. First, on the Odda expansion, with regards to the commissioning delay that you've 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 EUR150 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.

Question: Ioannis Masvoulas - Morgan Stanley & Co. International Plc - Analyst : Understood. 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?

Question: Ioannis Masvoulas - Morgan Stanley & Co. International Plc - Analyst : Very clear, thank you for that. Just lastly on Gartenberg, shall we think that the Q3 run rate of 3.7 million, 3.8 million tonnes is something you can sustain, assuming you get the permit? Or could you even move a bit higher than that level without any incremental investments?

Question: Ioannis Masvoulas - Morgan Stanley & Co. International Plc - Analyst : Thanks very much.

Question: Amos Fletcher - Barclays Investment Bank - Analyst : Yeah, 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 yeah, just interested to find out what's going on there. Thanks.

Question: Amos Fletcher - Barclays Investment Bank - Analyst : Okay. Very clear. And then as a follow-up, can I ask on -- another question about CapEx, where the spend rate in Q3 went down. It means you have to spend about SEK5.1 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?

Question: Amos Fletcher - Barclays Investment Bank - Analyst : 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?

Question: Amos Fletcher - Barclays Investment Bank - Analyst : Got it. Thank you very much. That's it.

Question: Marina Calero - RBC Capital Markets - Analyst : Good morning. Thanks for the call. I just have a follow-up question on Kevitsa. You mentioned the importance of 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?

Question: Marina Calero - RBC Capital Markets - Analyst : (inaudible) Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 7:30AM, BOL.ST - Q3 2024 Boliden AB Earnings Call

Question: Richard Hatch - Joh. Berenberg, Gossler & Co. - Analyst : Yeah. 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?

Question: Richard Hatch - Joh. Berenberg, Gossler & Co. - Analyst : Great. Okay. Very helpful, very clear. Thanks. And the second one is just -- I mean, you've effectively pointed to it. But just [Boliden] grades, Q4 on my numbers, it looks like you're 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's upside to that?

Question: Richard Hatch - Joh. Berenberg, Gossler & Co. - Analyst : Okay, cool. Thank you, many do. And the last one is just on Garpenberg, you talking about the expansion. Can you just talk about the TSF capacity you've got at site just in terms of the -- if that's a challenge or not at all?

Question: Richard Hatch - Joh. Berenberg, Gossler & Co. - Analyst : Okay, got you. All right. Thanks for your time. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 7:30AM, BOL.ST - Q3 2024 Boliden AB Earnings Call

Question: Daniel Major - UBS Limited - Analyst : Hi, yeah, thanks for the questions. Two for me. First one, just perhaps a clarification on a couple of bridge items in Q4. Can you just confirm how much out of the insurance provision you've received as cash? Is it SEK800 million? I think it was SEK600 million and SEK200 million. Is that correct?

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

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

Question: Daniel Major - UBS Limited - Analyst : Okay, thanks. And then last one, just a follow-up on Liam's question around M&A. You normally focus on gearing, where you're 24%, I suppose, above your target. But your net debt to EBITDA is still quite low, less than 1 times. 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? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 7:30AM, BOL.ST - Q3 2024 Boliden AB Earnings Call

Question: Daniel Major - UBS Limited - Analyst : Okay. So 40% would really be what you'd be comfortable going up to on the debt side? Is that right?

Question: Daniel Major - UBS Limited - Analyst : Okay, very clear. Thanks.

Question: Liam Fitzpatrick - Deutsche Bank - Analyst : Good morning. Second round here. I just wanted to follow up on Aitik because I've also had some questions from some investors on this. I'm still a little bit confused about why the grade is going down 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 7:30AM, BOL.ST - Q3 2024 Boliden AB Earnings Call

Question: Liam Fitzpatrick - Deutsche Bank - Analyst : Okay, thank you.

Question: Amos Fletcher - Barclays Investment Bank - Analyst : Guys, thanks for the follow-up. Just another question on Aitik. Do you think you need to spend more CapEx to deliver 45 million tonnes consistently at some stage?

Question: Amos Fletcher - Barclays Investment Bank - Analyst : Okay. And so do you think it's reasonable to assume 45 million for next year? Or is it sort of somewhere between 2024 levels and 45 million more reasonable?

Question: Amos Fletcher - Barclays Investment Bank - Analyst : Okay, cool. All right. Thank you.