Boliden Ab · OMXSTO:BOL

Boliden Ab — Q1 2012 Earnings Presentation

42 slides from Boliden Ab's earnings presentation, May 3, 2012

  1. Slide 1: Quarterly report January – March 2012

    Quarterly report January – March 2012 Lennart Evrell President & CEO Mikael Staffas CFO

  2. Slide 2: Summary Q1

    Summary Q1 MSEK  Slightly Sli htl weaker k global l b l 6 000 demand Quarterly EBIT  Slower growth in China Quarterly EBIT excl PIR*  Metal pprices higher g 5 000 Rolling g 4Q EBIT excl PIR*  Revenues MSEK 10,321 4 000 (10,158)  EBIT excl PIR* MSEK 1 1,217 217 (1,500) 3 000 ‒ EBIT MSEK 1,499 (1

  3. Slide 3: The Market

    The Market Boliden Group-Q1 2012 3 2012-05-03

  4. Slide 4: Industrial production

    Industrial production Annual growth % 25 20 15 10 5 0 ‐5 5 ‐10 ‐15 20 ‐20 ‐25 2008 2009 2010 2011 2012 USA Euro Area China World Source: Reuters Datastream, Boliden calculation world IP Boliden Group-Q1 2012 4 2012-05-03

  5. Slide 5: Construction market and vehicle production

    Construction market and vehicle production Construction market Production of light g vehicles Annual growth % Annual growth % 40 120 100 30 80 20 60 10 40 20 0 0 ‐10 ‐20 ‐40 ‐20 ‐60 ‐30 ‐80 USA EU27 China USA W.Europe China USA: construction spending EU27: Index construction production CRU Internati

  6. Slide 6: Zinc price and inventories

    Zinc price and inventories USD/t LME Inventory Shanghai Inventory Price Price Q avg Tonnes 5 000 1 400 000 Zi price Zinc i (LME average)) Q1-12 vs 4 500 1 200 000 USD/t period 4 000 Q1 11 2,393 -15% 3 500 1 000 000 Q2 11 2,250 -10% 3 000 Q3 11 2,224 -9% 800 000 2 500 Q4 11 1,897 +7% 600 000 2 000 Q1

  7. Slide 7: Copper price and inventories

    Copper price and inventories USD/t LME Inventory y Shanghai g Inventory y COMEX Inventory y Price Price Q avg g Tonnes 11 000 1 600 000 C Copper price i (LME average)) 10 000 Q1-12 vs 1 400 000 USD/t period 9 000 1 200 000 Q1 11 9,646 -14% 8 000 Q2 11 9,137 -9% 7 000 1 000 000 Q3 11 8,982 -7% 6 000

  8. Slide 8: Gold, Silver and Lead prices

    Gold, Silver and Lead prices USD/oz USD/oz 2 000 Gold 60 Silver 1 800 50 1 600 1 400 40 1 200 1 000 30 800 600 20 400 10 200 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 USD/t Lead Tonnes 5 000 450 000 Inventory Price Price Q avg 4 500 400 0

  9. Slide 9: Treatment charges

    Treatment charges Zinc Copper US$/t concentrate US$/t concentrate 350 120 300 100 250 80 200 60 150 40 100 50 20 0 0 Realised TC (including price participation) Standard grade TC Cif spot mine/trader USD/t Spot TC - outturn TC Annual contract benchmark Source: © CRU (www.crugroup.com) Source: © CRU

  10. Slide 10: Metal premiums

    Metal premiums Zinc Copper US$/t metal US$/t metal 200 140 120 160 100 120 80 80 60 40 40 20 0 0 Europe ex-works US Midwest Delivered Spot Copper premium CIF W. Europe F East Far E t (Western) (W t ) Benchmark CIF Europe Source: © CRU (www.crugroup.com) Source: © CRU (www.crugroup.com) Boliden Group

  11. Slide 11: Business Area Mines

    Business Area Mines Drill core archive, Boliden Boliden Group-Q1 2012 11 2012-05-03

  12. Slide 12: Mines - Financial Summary Q1

    Mines - Financial Summary Q1 MSEK  EBIT 822 (1 (1,156) 156) MSEK 5 000 – 646 MSEK in Q4 2011 Quarterly EBIT  Higher volume of zinc, lead 4 500 Rolling 4Q EBIT and gold vs Q4 4 000  Lower copper volume vs Q4 3 500  Better prices vs Q4 3 000 2 500  Projects on plan 2 000  New growth opportunitie

  13. Slide 13: Mines – Production

    Mines – Production Copper Zinc Vs period Q4 2011 Q1 2011 Vs period Q4 2011 Q1 2011 Milled ore, Metal.content Milled ore, Metal content, Milled ore -4% 19% Milled ore +8% +4% ktonnes tonnes ktonnes tonnes Metal content -6% -8% Metal content +15% +1% 10 000 24 000 100 000 1 500 20 000 80 000 8 000 1 2

  14. Slide 14: Aitik

    Aitik Q1 ffollow-up ll  O crusher One h rebuilt b ilt ‒ EBIT effect -50 MSEK  Ramp-up on plan ‒ From 18 to 36 Mtonnes of ore 2010 2011 2012 2014 Mtonnes R 4Q Plan Ore Production 27.6 31.5 32.8 36 Boliden Group-Q1 2012 14 2012-05-03

  15. Slide 15: Kankberg

    Kankberg Q1 ffollow-up ll  O plan On l ‒ Some mine production to concentrator in Q1 ‒ First gold Q2/Q3 ‒ Tellurium Q4 ‒ Capex MSEK 475 Project data  Production ‒ Ore 320 Ktonnes ‒ Gold 37,000 troz (1,150 kg)1) ‒ Tellurium 41 tonnes 1) Metal in concentrate. Average over life of mine Boliden Group-Q

  16. Slide 16: Garpenberg expansion – 2014

    Garpenberg expansion – 2014 Q1 ffollow-up ll  O plan On l  Personnel shaft – internal fixtures 1/3  Production shaft – slashing upper part  Industrial area started Project data  Ore production from 1.4 to 2.5 Mton/y  Mineral reserves 23.6 Mton ‒ Zn 5.1%, Ag g 144 g g/ton, Pb 2.1%  Underground

  17. Slide 17: Business Area Smelters

    Business Area Smelters Boliden Group-Q1 2012 17 2012-05-03

  18. Slide 18: Smelters – Financial Summary Q1

    Smelters – Financial Summary Q1 MSEK  EBIT excl.l PIR* 349 (226) 1 400 MSEK Quarterly EBIT ‒ 326 MSEK in Q4 Quarterly EBIT excl PIR* 1 200 Rolling g 4Q EBIT excl PIR*  Higher volume of free metals vs Q4 1 000  Better prices and terms vs Q4 ‒ Negative currency effect 800  Strong copper and weak z

  19. Slide 19: Smelters – Production

    Smelters – Production Copper Zinc Metal Metal Vs period Q4 2011 Q1 2011 production, Vs period Q4 2011 Q1 2011 Total feed, Total feed, production, tonnes tonnes Feed 2% -3% tonnes Feed 1% 4% tonnes Metal prod. 4% 2% Metal prod. -4% 4% 250 000 140 000 400 000 100 000 120 000 350 000 200 000 80 000 300

  20. Slide 20: E-recycling expansion – 2012

    E-recycling expansion – 2012 Q1 ffollow-up ll  Started St t d 18 JJanuary  E-recycling volume incl. existing capacity ‒ Q1 19,000 19 000 tonnes (12,000) (12 000) ‒ 120,000 tonnes annual rate from Q2  Capex on plan, MSEK 1,300 Project data  No 1 electronics recycling plant  Electronics from phon

  21. Slide 21: Financials

    Financials Boliden Group-Q1 2012 21 2012-05-03

  22. Slide 22: Financial Summary

    Financial Summary MSEK Q1 2012 Q4 2011 Q1 2011 Revenues 10,321 9,716 10,158 EBITDA 2 041 2,041 1 552 1,552 1 834 1,834 EBIT 1,499 1,075 1,359 EBIT excl. PIR* 1,217 991 1,500 Free cash flow 888 -482 448 Capex 917 1,368 664 Earnings per share, SEK 3.98 2.88 3.51 Gearing % Gearing, 24 29 21 * PIR=Proce

  23. Slide 23: Group EBIT Q1 2012 vs Q4 2011

    Group EBIT Q1 2012 vs Q4 2011 MSEK Q1 2012 Q4 2011 EBIT 1,499 1,075 Process inventory revaluation (PIR) 282 84 EBIT excl. PIR 1,217 991 Deviation 226 Specification of deviation Metal prices up 0-11 % and positive price adjustment, +310 V l Volume -3 3 Lower forward prices in Q1 vs 2011, -168 Prices

  24. Slide 24: Group EBIT Q1 2012 vs Q1 2011

    Group EBIT Q1 2012 vs Q1 2011 MSEK Q1 2012 Q1 2011 EBIT 1,499 1,359 Process inventory revaluation (PIR) 282 -142 EBIT excl. PIR 1,217 1,500 Deviation -283 Higher volume, Lower grades Specification of deviation V l Volume 26 14-20 % lower metal prices for all Boliden’s metals except for Gold +22 % an

  25. Slide 25: Cash Flow

    Cash Flow MSEK Q1 2012 Q4 2011 Q1 2011 EBITDA* 2,041 1,552 1,834 PIR -282 -84 142 Change in inventories 749 -591 884 Change in receivables 35 108 -781 Ch Change iin liabilities li biliti -127 127 218 -52 52 Change in working capital, other 5 0 -22 Change g in working g capital p 379 -349 171 Cash fl

  26. Slide 26: Capital Structure

    Capital Structure SEK bn b 31 M Mar 31 D Dec MSEK Net debt & Gearing % Unless otherwise stated 2012 2011 10 000 60 Total assets 37.4 37.6 Capital employed 30.1 30.5 50 8 000 Shareholders’ equity1) 21.9 21.0 40 6 000 N t Debt Net D bt 52 5.2 61 6.1 30 Gearing, % 24 29 4 000 20 Equity/Assets q y ratio

  27. Slide 27: New copper opportunities

    New copper opportunities Laver - new copper discovery Aitik - evaluation of new expansion Boliden Group-Q1 2012 27 2012-05-03

  28. Slide 28: Exploration strategy

    Exploration strategy  Focus on zinc-, copper-, and precious metal-bearing ores.  Near mine and field exploration. p  Goal - at least 10 year life-of-mine in each mining area.  Currently over 50 active projects.  170 exploration permits in Sweden  90 prospecting licenses in Ireland Boliden Grou

  29. Slide 29: Laver copper discovery

    Laver copper discovery Drilling Laver May, 2011 Boliden Group-Q1 2012 29 2012-05-03

  30. Slide 30: Laver – a historic Boliden area

    Laver – a historic Boliden area  Boliden copper mine 1938-1946  Ore production 1.3 Mton  Grades: ‒ Copper 1,5 % ‒ Gold 0,2 g/t ‒ Silver 36 g/t  Periodic exploration by Boliden 1970’s and late 1990’s 1990 s.  Restarted exploration in 2008 Boliden Group-Q1 2012 30 2012-05-03

  31. Slide 31: Laver – geography and permits

    Laver – geography and permits Exploration permit Boliden Mineral AB Exploration permit Other company Boliden Group-Q1 2012 31 2012-05-03

  32. Slide 32: Laver – general

    Laver – general Laver  Drilling D illi since i 2009 Old Laver mine  Potential for large porphyry copper N deposit  “Aitik scenario” – large scale, scale low grades Legend D ill h Drill hole l Drill hole, assay pending Cu-Au-Mo mineralization Lill-Laver Old mine Lake Road 1 km Boliden Group-Q1 201

  33. Slide 33: Laver – favourable geometry

    Laver – favourable geometry N B A 1 km masl m.a.s.l. A B +350 +250 +150 +50 100 m Legend Soil Cu-Au-Mo Mineralization Drill hole Boliden Group-Q1 2012 33 2012-05-03

  34. Slide 34: Laver - exploration results

    Laver - exploration results  57 drill holes total 21 700 meters completed until April 2012  A Cu-Au-Mo bearing mineralization not yet classified as Mineral Resource  Preliminary indication of Laver resource and grades: Potential resource Cu (%) Au (g/t) (Mt) 500-700 0.15-0.25 0.10-0.15 Boliden Gr

  35. Slide 35: Laver continuation

    Laver continuation Laver Old Laver mine  Continued exploration N  Preparation for mining concession ‒ Mineral resource estimation by fall 2012 ‒ 7000 meters additional drilling ‒ Environmental impact study mid 2012 Legend g Planned drill hole for resource estimation Drill hole Drill hole, assay pe

  36. Slide 36: Evaluation of new expansion Aitik

    Evaluation of new expansion Aitik Boliden Group-Q1 2012 36 2012-05-03

  37. Slide 37: Aitik –potential for further expansion

    Aitik –potential for further expansion  Extensive E t i near mine i exploration l ti Kton 1 800 000  Significant increase in Mineral Proven/Probable Resources Measured/Indicated 1 600 000 Inferred  Aitik on 33 Mton capacity Production*10 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 0

  38. Slide 38: Aitik options

    Aitik options  C Capacity it 2014 2014, 36 Mton/yr Mt / ‒ Tailings expansion  Expansion to 45 Mton/yr: ‒ Pre-feasibility Pre feasibility study started ‒ Tailings expansion ‒ Mining equipment  Expansion up to 65 Mton/yr will be evaluated Boliden Group-Q1 2012 38 2012-05-03

  39. Slide 39: Aitik and Laver - summary

    Aitik and Laver - summary  Exiting E iti potential t ti l ffor ffuture t increase i in i Boliden’s copper production  Aitik ‒ Potential expansions to 45 Mtonnes (evaluate 65 Mtonnes) ‒ Pre-feasibility y study y started for 45 Mton/yr  Laver ‒ High potential ‒ Large volumes ‒ Low grades ‒ Continue

  40. Slide 40: Going forward

    Going forward  E-recycling E li ffullll capacity it iin Q2  Boliden area ‒ Kankberg start mid-year ‒ Gold end Q2 ‒ Tellurium Q4 ‒ Copper gradually down (Maurliden East) ‒ Zinc gradually higher (Maurliden)  Aitik grade lower Q2 – approx. 0.2%  Maintenance EBIT effect in Q2 ‒ Harjavalta H j lt and

  41. Slide 41: Disclaimer

    Disclaimer  This presentation has been prepared by Boliden for information purposes only only. Nothing in this material shall be construed as an offer or solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction.  This presentation has been pr

  42. Slide 42: Boliden produces metals that make modern life work

    Boliden p produces metals that make modern life work Boliden Group-Q1 2012 42 2012-05-03

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