Earnings call transcript: Boliden Q2 2025 earnings miss on lower revenue

Boliden reported its Q2 2025 earnings, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of 2.02 USD, falling short of the anticipated 3.19 USD, marking a 36.68% negative surprise. Revenue came in at 22.29 billion USD, slightly below the forecasted 22.65 billion USD. The stock price reacted with a 0.36% decline, closing at 303.1 USD, amid a challenging market environment. According to InvestingPro data, three analysts have recently revised their earnings expectations downward for the upcoming period, suggesting continued headwinds ahead.

Key Takeaways

• Boliden’s EPS and revenue missed expectations significantly.
• The company maintained a strong balance sheet with net debt to equity below 30%.
• Record production at Aitik mine and completion of several key projects.
• The stock price experienced a slight decline post-earnings release.
• Full-year zinc grade guidance for Garpenberg was reduced.

Company Performance

Boliden showcased resilience in its operational segments despite missing earnings expectations. The Mines segment contributed 1,000 million SEK, while the Smelters segment delivered close to 600 million SEK. InvestingPro analysis reveals the company maintains strong financial health with an overall score of 3.03 (rated as "GREAT"), operating with a moderate debt-to-equity ratio of 0.85. The company’s gross profit margin stands at an impressive 72%, demonstrating operational efficiency despite market challenges.

Financial Highlights

• Revenue: 22.29 billion USD, slightly below expectations.
• Earnings per share: 2.02 USD, missing the forecast by 36.68%.
• EBIT excluding inventory valuation: 1,300 million SEK.
• Free cash flow: 2,000 million SEK (excluding acquisition proceeds).

Earnings vs. Forecast

Boliden’s Q2 results fell short of market expectations, with an EPS of 2.02 USD compared to a forecast of 3.19 USD, resulting in a 36.68% negative surprise. Revenue also missed estimates, coming in at 22.29 billion USD against the expected 22.65 billion USD. This performance marks a significant deviation from the company’s historical trends of meeting or slightly exceeding forecasts.

Market Reaction

Following the earnings announcement, Boliden’s stock price saw a modest decline of 0.36%, closing at 303.1 USD. The stock’s movement reflects investor concerns over the earnings miss, although it remains within its 52-week range of 259.4 to 393 USD. InvestingPro data indicates the stock generally trades with low price volatility, with a beta of 0.55, suggesting relative stability compared to the broader market. Based on InvestingPro’s Fair Value analysis, the stock currently appears undervalued. For investors interested in identifying similar opportunities, check out the most undervalued stocks list.

Outlook & Guidance

Boliden adjusted its full-year zinc grade guidance for the Garpenberg mine from 3.3% to 3.1%. The company expects the Odda smelter to contribute to earnings from Q4, with full depreciation reaching 275 million SEK per quarter. All future guidance will be consolidated in December, indicating a cautious approach in light of current market conditions.

Executive Commentary

CEO Mikael Staffas expressed confidence in the company’s operations, stating, "We feel stronger than we’ve done in a long time." He highlighted the company’s strong balance sheet and operational efficiency, despite acknowledging the unsustainable levels of current treatment charges in the industry.

Risks and Challenges

• Currency fluctuations impacting financial performance.
• Slower ramp-up at Tara mine and Garpenberg’s reduced zinc grade.
• Low copper spot treatment charges affecting profitability.
• Potential macroeconomic pressures and commodity price volatility.
• Integration challenges with newly acquired Lundin mines.

Q&A

During the earnings call, analysts inquired about working capital expectations, which Boliden expects to remain flat in Q3 with a potential release in Q4. Questions also focused on the slower production ramp-up at Tara mine and the impact of new asset depreciation on financial results. Unlock deeper insights into Boliden’s financial health and future prospects with InvestingPro, which offers exclusive access to detailed Pro Research Reports, comprehensive financial metrics, and expert analysis covering 1,400+ top stocks.

Full transcript - Boliden AB (BOL) Q2 2025:

Olof Grijenmark, Head of Investor Relations, Boliden: Ladies and gentlemen, I’d like to welcome you to Boliden’s Q2 twenty twenty May Presentation. My name is Olof Grijenmark, and I’m Head of Investor Relations. Today, we will have a results presentation led by our President and CEO, Mikael Staffas and our CFO, Hakan Gabriel Son. We will also have a Q and A session, which will be led by the operator. Mikael, welcome.

Mikael Staffas, President and CEO, Boliden: Thank you, Olaf, and welcome to all of you out there as well. I hope you’re doing fine. Let’s get going and get to talking about the quarter and the core report that we have just released. If you look at the highlights, we had a profit excluding inventory valuation of almost SEK 1,300,000,000.0. There’s been quite a lot of accounting going on in this quarter, and Hakan will come back and talk a little bit about those things that are affecting plus and minus.

What is clear, though, is that we have a negative currency effect of about 600,000,000 compared both to last year and compared to first quarter. It happened to be the same numbers. We’ve also had extensive planned maintenance, and this was well communicated beforehand, and we were happy to be able to complete them exactly according to plan. As always, when you have major maintenance stops, you’re always a little bit nervous when you cool down the processes and start looking at what you have that you will find something more that needs to get done while you’re doing things. But this year, most of the things were in the condition that we expected, and we could do the needed actions as was planned.

We have a stable production and a stable underlying cash flow. We’ll talk more about that going forward. We’ve included the two Lundin mines as of this quarter or as of April 16, to be more exactly. The integration is going fine, and we’re moving along well there as well. This also creates some accounting issues, but Hakan will clear it all out for you as he comes in a little while.

We have a record production in Aitik, and we’re bringing this up here because it is important. It is so that regarding ore production, we are producing according to what we have guided. We are around a 40,000,000 tonne pace right now. But we have been able and we’re very happy that we’re so good in getting the stripping done. That has been an issue during the whole dam project that stripping was falling a little bit behind.

It’s part of the issues right now that we don’t really have too many alternative places to go to when things happen. The fact that we get stripping going now will give us more flexibility going forward to handle issues. Our big projects are according planning they’re going on according to plan as we have presented them in the Capital Markets Day back in March. So the financial performance talked about just shy of SEK 1,300,000,000.0. In there, there is a real comparison issue, which is linked to the one off costs for advisers, etcetera, linked to the acquisition and the equity rates that we did with the Lundin assets.

And we had the planned maintenance at SEK 400,000,000 EBIT impact, just as it was communicated. Free cash flow, if you exclude the proceeds for the acquisition, was SEK 2,000,000,000. We’re very strong and happy about that. Almost one of it came from insurance money, but that was also well communicated beforehand and part of the project that we’re doing right now. The total free cash flow then, if you take also the acquisition amount into place, was, of course, much more negative.

We’re happy with the 29% gearing. This is a in our mind, at least, a stronger balance sheet than we would have planned to have after the acquisition, of course, thanks to the relatively strong cash flow that we had in the quarter. CapEx is moving along according to what has been communicated. On the big projects, the Odda project, nothing really major to happen compared to what we said in March. The commissioning is ongoing, and we’re looking for ramp up now in the second half of the year.

The Kristineberg expansion is more or less done. It was inaugurated back in May, and the last pieces are coming in place as we’re speaking. The Ronshaw tank house, well on track. We will see the ramp up here of the second half of next year. The Aitik Dam is already completed.

You can see it’s already history, but we did mention here that we actually now have all the permits in place. When we did the Aitik Dam, we used an exception in the Swedish environmental law that you can do certain things and ask for a permit afterwards. Normally, you have to ask for the permit first. There is a little bit of a risk with this. We never thought it was very big, but of course, now that we actually do have the permit in line with what we thought we would get.

The Boliden area tailings recycling is also well underway. Completion in the second half of next year. And also here, and this one is we’re also very happy with, we’ve gotten the permits regarding this in place during this quarter. So we now have all the prerequisites ready to be able to continue going forward. On the ESG side, things are also moving well forward.

The greenhouse gas emission looks like it’s going the wrong way. But here, you have to remember that we are now including two more units into this one and that we will of course, also we will restate our base here in the science based target as we move forward. We had a good quarter when it comes to LTIs. So we are clearly better than last year, we’re also moving our twelve month rolling average down. So we’re in a good place regarding that.

Also sick leave, as you know, it’s been a little bit of a tough issue for us. Sick leave went up during COVID and hasn’t really come down yet. But now finally, we’re seeing trends coming in the right direction. Let’s hope that we can keep that trend in place. And it’s important to understand that Somnikor and Zinkgruvan are included in the last quarter, but not recalculated the numbers here for historical periods.

On the market side, well, lots of things have happened on the market side. As you recall, we had a very clear dip on metal prices and currency during April. Metal prices basically recovering in the later part of the quarter, whereas the exchange rates for the dollar has continued to be weaker than it’s we’ve been used to. So we see that. And if you look more on the metal side, we also see that the zinc price has been going lower, whereas the precious metals have been going higher, but the total mix for us is about zero.

There is a very big push on the copper spot TCs. It doesn’t affect us so much directly because we have very little on spot. Most of our copper comes on benchmark. But of course, as this very low spot TC continues into the second half of the year, it will, of course, have some effect on benchmark for next year. So it’s a development which is clearly problematic from our point of view, and I think it’s problematic for the whole industry point of view because the levels that we see on TCs right now is not sustainable for the industry as such, even though the miners right now have a very good time.

The byproducts, including sulfuric acid prices have been quite stable for us as well. If you look generally what’s happening in the market on the cost situation, you can see here when we’re looking at the different percentile development, you can see that copper, still the copper price is quite a lot above where the cost curves are. There is a shortage of copper that is already priced in into the price, but the price has been relatively stable during this latest time. You can also see here that the cost is coming down. It looks like copper miners around the world are good at taking cost out.

But do remember that the high gold price is part of this and also the low copper TCs start playing in as a kind of freebie for the copper miners in lowering their cost. If you move over to the zinc side, once again, it has been for a while, the zinc price is relatively low. It also looks like zinc mines around the world are extremely good at taking out costs. Here, the high silver price is helping a lot and also the lower zinc TCs is helping to get the cost level down. It is not so much that the mines around the world are that good at taking out costs.

Looking at nickel. Nickel is problematic. You can see that there are very few nickel mines in the world that make any kind of money at all. There has been a hard push to get the costs down. Here, there are some real costs.

Cost cutting that’s been going on, and it’s now on a level and the nickel price is on a level where it’s very unsustainable for many in the industry over time. If we move over to mine production, when you look at that here, number one, just to be very clear, we have once again included zinc, Ruevan and Somnenkor as they have produced during the ten weeks of the quarter that we have owned them. We have not adjusted historical periods. Therefore, of course, zinc looks extremely strong with the profile of the new mines. Also, gets some help from Somentor.

And nickel is, of course, only Kevitsa that pushes it. Having said that, we’ve had a relatively strong production in all the mines. The Aitik is in line with what we guided for in the 40,000,000 pace as we can have now with the drybite issue. Recoveries are going in the right direction and better than they were in Q1. Still a little bit to go to get back to the normal levels, but we’re heading in the right direction and we’re getting out of this oxidized zone.

In Garpenberg, the throughput is slightly lower. We’ve had quite a lot of maintenance in Garpenberg as well during the quarter. And we have a lower zinc grade compared to last year. We’re having sill pillar mining that is slower than we had anticipated, or I should say, grade sill pillar mine progressing slower. We have not sterilized any of this.

It’s not that we have lost any of the high grade stopes, but we’ve had to, in the short term, replace the high grade stopes with some alternative stopes, which have been lower grade. And we’re coming back a little bit to the outlook. We don’t think that we’re going to be able to speed up this Silpilla mining in the very short term. Kevitsa, strong production, also relatively good grades. The Boliden area, very stable production, good grades even though they’re lower than last year, but last year was crazy high grades in the Boliden area.

In Tara, the ramp up is going on. Somentkor sale production. We’ve had some issues, as you all read about, the big power outage in the Iberian Peninsula, and we had a separate power outage, which was more local around Sominkor that has impacted negatively, but otherwise, moving on nicely. Zinkgruvan moving on nicely. They’ve had slightly lower grades than what they usually have and what they have in the R and R statement, but not really much around that.

On the smelter side, also good production. Runscher, strong and stable production. We’ve managed to find actually the right feed for Runscher. We have very strong free metals coming out of Ronnskar in this quarter, partly linked to the fact that we’ve been producing well and we’ve been having a good mixture and also part to that as with these free metals, part of that is linked to inventory and inventory measurement, and we have done some inventory and been able to adjust positively according to that. Harjavalta, major maintenance stop.

But apart from that, also good production around that solid production. Kokkola, major maintenance stop, but good production around that and also very well planned beforehand. We managed to get inventories of semi products within the system so that we could run the areas that were not having maintenance in a good way. So very strong performance there. In Odda, we’re moving in the right direction in terms of getting up to the 200,000,000 as you know, from 160,000,000 to 200,000,000 That is progressing well, although we did have an unplanned maintenance situation around that.

But otherwise, well around that. And as we come into the fall, we’ll start looking at the SEK $350,000,000 level. Also, Baeser, small but very strong production in this quarter. So with that, financial summary. Hakan, please.

Hakan Gabriel Son, CFO, Boliden: Thank you, Mikael, and good morning. Well, as you have seen, we have reported an EBIT result, excluding process inventories, just shy of SEK 1,300,000,000.0 in a quarter that has been characterized by production at or above expectation in most units, lower prices significantly lower prices, in particular, dollar and then as usual in the summer months or summer quarters, high planned maintenance. This is down compared to last year, but then bear in mind, though, that last year had 2,400,000,000.0 insurance income included in the results. Capital expenditure is at SEK 4,200,000,000.0, which is an increase compared to both comparison periods, but fully in line with our full year guidance. Free cash flow, a number that we’re quite happy with, SEK 2,000,000,000, excluding then the cost of the acquisition of Samikor and Sinkyravan, and that is an improvement compared to both comparison quarters.

I’ll come back to that in a while. Looking at the result by business area. Mines delivered just above SEK 1,000,000,000, relatively stable compared to the comparisons. Smelters, a really strong quarter at SEK 600,000,000 close to SEK 600,000,000. And this is in a quarter where we have the full quarterly impact of the lower treatment charges, high planned maintenance.

So I think this is a sign of strength from the smelting division. Obviously, it’s lower than last year when we had the one off in the form of insurance income in the income statement. Other and elimination then, that’s mainly the internal profit elimination that we do, which is a timing adjustment connected to revenue recognition. That is a negative 300,000,000. In there, there is about SEK 100,000,000 that is an internal profit elimination connected to the new mines, Somikor and Sink Gruvan, which are now classified as internal feed.

Going in a bit more into detail about the changes between quarters. There have been quite a few moving parts. Year on year, if you put everything together, the development of prices and terms is actually flat. We have a significant negative impact from the U. S.

Dollar, about SEK 600,000,000 treatment charges, of about SEK 300,000,000. But then compared to last year, we have a good development on metal prices and in particular then precious metals, which improved by about SEK 700,000,000. And then we also had a good run on byproducts. Volumes are up by a bit more than SEK 1,000,000,000, and that’s primarily the acquired units. On top of that, we have a negative impact from internal profit eliminations.

This year, it was negative. Last year, it was positive. So that makes a fairly big difference here in this line. Costs are up, again, due to some SEK1 being consolidated and also due to the ramp up of the Tara mine. We also had a bit more maintenance costs costs in smelters compared to last year.

Depreciation, up SEK 700,000,000 here. The new units account for almost SEK 500,000,000, Somikor and Sinkrivan. But we also have increases in Tara, Odd and Aitik as a result of recent investments and the ramp up of Tara. Odd, just put in some numbers on that. Last year, we were running at SEK 50,000,000 per quarter depreciation.

This quarter, we are running at SEK 100,000,000 this quarter. But as the project is fully commissioned, the GZO expansion project is fully commissioned, I expect that number to come up further to about SEK $2.75 ish per quarter. And then, of course, I’ve commented on the items affecting comparability, and that’s included in this comparison as well, of course. Looking at quarter per quarter, here we see a significant price reduction. Again, dollar is the main part, roughly SEK $650,000,000 negative.

Treatment charges going from half of the impact in Q1 to full impact in Q2, that makes up about SEK 150,000,000. And then metals, all put together, is about SEK 100,000,000 negative. There, we have a fairly big impact from definitive pricing of volumes that were preliminary priced at the last quarter end. So we had a negative impact of about SEK 300,000,000 from that. But then that was largely countered by a good development on precious metals, which contributed by about SEK $250,000,000 in this quarter compared to Q1.

So all in all, a fairly big change, mainly attributable to dollar. Volumes were up. We had the impact of of some SEK $1.61 being consolidated. We had some negative internal profit, as I commented, but we also had a strong development of free metals in smelters. That was a mix of a number of reasons.

One is the favorable the relatively favorable concentrate mix in the quarter. We’ve had good recoveries in production in the smelters. And then there is also a component positive component from the stock take where we actually had more metals than anticipated. So really strong performance in Smelters in that respect. And then on the cost side, again, mostly related to the changes mostly related to Samikor and Sinklravan plus a little bit more planned maintenance in Smelters.

And then items affecting comparability here is mainly the transaction costs for Samikor and Sinkgruvan that we wrote about also in the Q1 report in the outlook. Moving over then to cash flow. We have a good cash flow here, 2,000,000,000. If we back out the cost for the acquisition of the two new mines. We had cash flow of about SEK 3,500,000,000.0 each from EBITDA and from working capital.

And in particular, the working capital is good. It is true that we were helped in there with about SEK 1,000,000,000 from insurance income insurance cash flow. And also in a situation with prices coming down, that automatically means that we release a little bit of working capital. But it was still well managed inventory positions during the maintenance stops in Smelters. So we’re happy about that.

All in all, when we look at the balance sheet and the financing, you can see the impact of the acquisitions. We have total assets coming up to SEK 136,000,000, capital employed to close to 100,000,000,000. And also, the net reclamation liability is coming up from 6% to 8%. So that’s all impact from the two acquisitions or two acquired mines. But we are really happy that we have been able to maintain a net debt to equity at below 30, this close to an acquisition.

Again, that is a position of strength, and we have a robust balance sheet. So I’m very happy with that. And for the outlook, I hand over again to you, Mikael.

Mikael Staffas, President and CEO, Boliden: Thank you, Hakan. Regarding the outlook, it is a relatively short and quick presentation. We are reiterating basically everything we have said before regarding CapEx, regarding throughput and regarding grades. With one exception, we are guiding down the full year grade in for zinc, I should say, in Garpenberg from 3.3% to 3.1%. This is more in line with where we have been mining the last couple of years.

The reason or the last couple of quarters, I should say. This is mainly due to that we’re having some very high grade stopes in the Silpillar mining area. As you know, Silpillar mining is always dependent on having good ground conditions, and we’ve had issues with that. And we have not been able to mine this area as fast as we had originally planned. We have not sterilized any part of this.

It’s all going to come out at some stage from the mine. But in the meantime, it’s going slower, and we have been or we’ve been forced to move over to other areas to cover the volume, areas that have lower grade. But apart from that, there is basically no change. Regarding the calendar, there’s not much to talk about it in general. You’ve seen this before.

There is one new item that we have not done before. We have historically guided for the next coming year in two tranches. We’ve done certain parts together with Q3 and certain parts together with Q4. It’s been a little bit, I would say, wrong in turn compared to our internal processes because many of the guidance actually is set in a Board meeting in early December, when we set formally both CapEx and also grades and production volumes and so on. And we have, therefore, decided to move this all together, and we will do all the communication regarding next year in one shot.

The things that used to come Q3, like CapEx and so on, the things that used to come in Q4, like the maintenance stops, all in one shot coming in early December. So it’s a little bit different than it has been historically. Otherwise, I think you should remember or recall all of these numbers or these dates. Should nothing be anything new. And with that, I’ll just reiterate while we’re on this planet, our purpose, our vision and our values.

And with that, I’m open to take questions.

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

Marina Calero, Analyst, RBC Capital Markets: Morning. Thanks for the call. Two questions from my side. The first one on the new assets, Samimcor and Singuland. I appreciate you only report yearly financials for each of the mines, but can you give us some color on how the cash cost for the quarter are tracking for these assets compared to your full year guidance?

And then my second question is on working capital. Assuming prices stay where they are today, how should we think about working capital in the second half of the year?

Mikael Staffas, President and CEO, Boliden: I give them both to you.

Hakan Gabriel Son, CFO, Boliden: Okay. Well, if we look at the new assets, I think most when it comes to production is roughly in line with the full year guidance. We have provided also an EBITDA outlook of USD 300,000,000 to USD $350,000,000 per year as a five year average at consensus prices. And current prices are a bit lower than that, having an impact roughly of 150,000,000. So we are a bit lower than our long term outlook due to prices, in particular, the dollar.

But production has started roughly in line with our expectations. Mikael indicated that we had some impact from power shortages and from slightly lower grade than usual in Sinkgruvan, but it’s still a fairly limited impact. So the guidance is still solid. Working capital, we released this quarter SEK 3,500,000,000.0. In there, there are a couple of things that I’m not expecting necessarily to repeat.

One is the insurance income. We have SEK 1,000,000,000 this quarter. I expect SEK 300,000,000. So that’s a reduction of SEK 700,000,000. And then we were helped a bit by the reduction of prices, which hopefully will not happen in Q3.

So it will be a substantially lower number, but I still think that we not tie too much more working capital. So my best estimate for the working capital development is flat roughly compared to where we stand right now.

Marina Calero, Analyst, RBC Capital Markets: Understood. Thank you very much.

Operator: The next question comes from Adrian Gelani from ABG Sundal Collier. Please go ahead.

Adrian Gelani, Analyst, ABG Sundal Collier: Yes. Hello, and good morning. My first question is what really was the issue here with Garpenberg that caused you to lower the grade guidance? And I guess, what has changed in the mine plan compared to your assumption from before?

Mikael Staffas, President and CEO, Boliden: As I said, this is regarding the Silpillar mining that has been going on for quite some time. And for those of you who don’t know what Silpillar is, that is that we have mined in one area and we have mined below. And there is a piece in between these two areas that was left in earlier time, and now we’re doing this intermediary level. Because it’s mined both below and above, it has some specially built in challenges regarding rock stability in these areas. And we have not been able to mine this area as quickly as we would have liked to, and it is a high grade area.

We have alternative stopes to go to, alternative positions, but they are at lower grade. We it is possible when you run into these problems that you might sterilize a mine, I. E, that you run into rock mechanical problems, which means that you can never mine there because there is but that’s not the issue for us. We’re still in an area we’re going get all that zinc out of the in the Gaffner mine. It’s just going to take a longer time.

Adrian Gelani, Analyst, ABG Sundal Collier: Okay. Understood. And then in Aitik, should we expect any notable improvements in the recoveries for the second half of the year? Because I think you mentioned in passing that you’re sort of starting to move out of this problematic zone that you’re in.

Mikael Staffas, President and CEO, Boliden: Yes. Recoveries should go up in the second half of the year as we move out of the oxidized zone. So yes. And you can see there’s already been quite an improvement from Q1 to Q2 even though we’re still below historical levels, but we should be able in the second half, if not quite at historical level, at least get quite a bit closer to historical levels.

Adrian Gelani, Analyst, ABG Sundal Collier: Okay. Understood. And then finally, just a housekeeping question. Can you remind us how much of the insurance cash flow is left when that will come?

Hakan Gabriel Son, CFO, Boliden: Well, let’s see if I can do that. It should be I’m looking at Olof here to do it. But we should have about $350,000,000 per quarter in Q2 sorry, in Q3 and Q4. And then there’s about SEK 300,000,000 left for next year.

Mikael Staffas, President and CEO, Boliden: So about SEK 1,000,000,000 left, Yes, correct.

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

Liam Fitzpatrick, Analyst, Deutsche Bank: Good morning. One question on Garpenberg and then another one on ITIC. On Garpenberg, can you just give us an update on the permitting process and the timing there? And in relation to this ground issue that you’re encountering at the moment, is this just short term, or or could this persist into into 2026? And then on ITEC, you’re sounding more confident just in terms of the amount of amount of material that you’re moving and completing the the tailings dam, are you still of the view that you’re gonna remain some way below the 45,000,000 ton nameplate for the next few years?

Or or could there be, upside to that in terms of getting up to 45,000,000 tonnes within, say, the next one to two years? If

Mikael Staffas, President and CEO, Boliden: we start with the last one, it’s we haven’t guided for anything beyond this year. It is true that we’ve hinted that it might not jump right away, but we’ll come back with the guidance regarding next year. It is mainly not about the mine as such. It’s more about the mill and how the pebble crushing that we need to increase in order to handle the direct situation, how quickly that one is moving on. So I’ll leave you with that.

Then you had Gapenburg permits. We are moving on, and we hope to get a permit for the increased level to SEK 4,500,000.0 before the end of the year. We are not sure that we will get it, but we’re still hopeful that, that will happen. We are relatively sure that we will get the permit, but it’s a timing that is a little bit unclear. And then the issues on the mining in Garpenberg.

Garpenberg is a big mine with many different areas, and we do sill pillar mining in other areas as well. But this one is a little bit more sensitive to the outside because it’s such a high grade area, and therefore, Otherwise, when we’re doing Silpillar mining and it goes slower than we thought, you won’t notice as we go somewhere else. But yes, there are always those kind of issues, but you should maybe not see them normally. It’s because that we’re having so high grades in that particular area.

Liam Fitzpatrick, Analyst, Deutsche Bank: And so is it just an impact on 2025? Or could it extend into 2026?

Mikael Staffas, President and CEO, Boliden: Well, mean, there are two different answers to that. Number one is that, of course, what’s happening in 2025 is actually improving 2026 because we’re saving some high grade areas until next year. That doesn’t necessarily I need to be very clear, but that doesn’t necessarily mean that the grades will go up because you know that we are on a grade decline over time as we are mining above the average of the reserve. But of course, this is helping. And then comes the question whether next year, where we have other simpler mining, whether that will be affected by this thing being slowed down.

This should also be viewed in light of the that we hopefully will mine much more next year, given that we hope that we get a permit to mine at a higher level. Those are all things that we’ll come back to as we start guiding and we come to December.

Operator: The next question comes from Krishan Agarwal from Citigroup. Please go ahead.

Krishan Agarwal, Analyst, Citigroup: Hi. Thanks a lot for taking my question. A quick follow-up on the working capital. So Houkan mentioned that working capital flat is kind of a good assumption for the second half. And then you’re also saying $700,000,000 will be insurance claim into that.

So is it fair to assume that underlying business will have a slight more of the working capital build? And hence, full year probably may also be a flat working capital development excluding the insurance?

Hakan Gabriel Son, CFO, Boliden: Well, typically, what we have is if I talk about the general development of working capital, we typically have a fairly stable level in Q3 and then we release in Q4. I expect to be that to be true this year as well. Everything related to working capital for zinc driven in Salmonkor is already in, so that is not a change. There will be some working capital build in Odda once Odda is ramped up. Being a zinc smelter, it’s still on fairly modest level compared to the inventory build you see in a copper smelter.

So let’s say SEK $05,000,000,000 or something like that, that is the magnitude we’re talking about. So I still think that the overall picture holds flat Q3 and then some release in Q4.

Krishan Agarwal, Analyst, Citigroup: That’s very clear. Then a question on free metals. So the free metal recovery you are attributing to bit of like inventory adjustment and higher pricing. Should we read this in a way that at current gold and silver pricing, free metal recoveries can stay significantly higher for 2025 and 2026?

Mikael Staffas, President and CEO, Boliden: I’m not sure I got the question right. Did you get the question?

Hakan Gabriel Son, CFO, Boliden: No, not sure. Did you ask about whether the current level of free metals is sustainable?

Krishan Agarwal, Analyst, Citigroup: Yes, yes.

Hakan Gabriel Son, CFO, Boliden: Yes, okay. I think there is we talked about some one offs, and I think that accounts to about SEK 100,000,000. But apart from that, I mean, it is sustainable. And in particular, once we get to the point where we’re ramping up the new tank house in Ranhokar, which will happen next year, we should see a substantial improvement. We’ve been talking about roughly SEK 1,000,000,000 per year previously.

And with current gold prices, it might even be more than that.

Krishan Agarwal, Analyst, Citigroup: Yes. No, that’s very clear. And my last question is on you are into the ramp up phase. How should we think about any kind of earning contribution in Q3 and Q4?

Mikael Staffas, President and CEO, Boliden: For Q3, there will be a relatively limited contribution. For Q4, we should see we should see contributions from Q4, yes. Exactly how much, I don’t know if we have guided for, but there will be clearly contributions coming in.

Krishan Agarwal, Analyst, Citigroup: The

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

Amos Fletcher, Analyst, Barclays: Yeah. Good morning, gentlemen. Couple of questions. First question was about Tara where production actually went down quarter on quarter when the mine is supposed to be ramping up. Just wondering what happened there.

And then secondly, on the Lundin assets, can you just give us a feel for the EBIT contribution in the second quarter so we can get a sense of what the Q3 delta will be from a full quarter of ownership? On

Mikael Staffas, President and CEO, Boliden: the second one, I don’t think we’re going to guide you much more than what Hakan just said that the number that we have given of $300 $350 per year is we’re looking a little bit south of that right now because price and terms are slightly lower than what they were when we looked at this in the fall and guided for this. And then, of course, you have to make the correction from having ten weeks going up to thirteen weeks, of course, is something around that. I don’t think we can really say much more. Regarding Tara, it’s true that you’re seeing that production actually went down. The it’s always when you start up things like this, we had a little bit of a free go in the beginning because we had ore that was easily muckable.

Then we came into a situation that you have to develop every stope that you’re then going to muck later, and the developments have been slightly slower, coming up to speed. And all in all, this should not change the guidance for the whole year, but that’s there’s been a little bit of that. We’ve been slow at getting the new development up to the real pace, and that’s what has hindered us here in Q2.

Hakan Gabriel Son, CFO, Boliden: Maybe just one additional comment on the Lundin assets. We have mainly talked about EBITDA in our guidance and in our follow-up. But we as a part of the accounting here of the acquired units, have we do not have any goodwill or any assets that are never depreciated. So we’re depreciating the full acquisition price over time. And in this quarter, we had close to SEK 500,000,000 in depreciation.

And that, of course, has an impact on the level of the EBIT contribution. EBITDA is then, as we said, roughly SEK 150,000,000 away from what we have seen in our business case and what we’ve guided for externally.

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

Ioannis Mazvoulas, Analyst, Morgan Stanley: Good morning gentlemen. Thank you very much for the presentation. Just a few questions left from my side. The first on the Odda smelter, you talked about some earnings contribution from Q4 this year, but can you remind us which quarter do you actually expect to get the full contribution during 2026? And then can you remind us what’s the annual depreciation charge once the asset is fully commissioned?

Mikael Staffas, President and CEO, Boliden: Regarding the full impact, we should see quite a lot of the full impact starting relatively early in ’twenty six. Regarding depreciations?

Hakan Gabriel Son, CFO, Boliden: Yes. Well, the full impact should be about SEK $275,000,000 per quarter. And then when I say full impact, that’s the full depreciation of the Oda site. Out of that SEK 50,000,000 per quarter was the run rate before the expansion. So a little bit more than SEK 200 extra million per quarter is what we’re looking at.

Ioannis Mazvoulas, Analyst, Morgan Stanley: Very clear. Thank you. Second question on the corporate treatment charges. Mikael, you mentioned that the depressed disease we’ve seen are problematic for the smelting industry. But are we at a pain point that we’re going to see some curtailments across the industry?

Or contribution from gold and sulfuric acid keeping margins just about manageable, which seems to be the case as curtailments so far haven’t been as prominent as someone would have expected? And also related to that, do you think it’s possible we could see a negative benchmark for 2026?

Mikael Staffas, President and CEO, Boliden: Regarding curtailments, Johannes, I think you’re much better than me to see what’s happening in the rest of the industry. You’re right that we don’t see the curtailments, and you could argue what because I’m pretty sure that there are some smelters out there who are running at negative cash margins at these prices and terms, but might not be willing as of yet at least to take the downtime. That’s also expensive if you run a smelter. But it’s clearly so that the low TCs, even though they are partially compensated by the high gold price and partially compensated by a healthy sulfuric acid prices, is still on an unsustainable level. Regarding TC’s benchmark going forward, that’s an interesting one.

I don’t really want to speculate because we are not part of the table, and we are just a price taker on those TC discussions. But you’re not the first one who are mentioning the possibility of negative full year TCs for next year. We will see what happens in the fall.

Ioannis Mazvoulas, Analyst, Morgan Stanley: For that. And maybe just a last one on the guidance that you will release in December. You mentioned that’s going to be harmonized across the assets. Out of curiosity, are you looking to stick with the traditional bulletin format or potentially shift to a format of providing asset level guidance on contained or payable metal for the mines?

Mikael Staffas, President and CEO, Boliden: Let’s keep that for December, Johannes.

Ioannis Mazvoulas, Analyst, Morgan Stanley: Well. Thanks so much.

Mikael Staffas, President and CEO, Boliden0: The

Operator: next question comes from Paul Kirginhoefs from Bank of America. Please go ahead.

Ioannis Mazvoulas, Analyst, Morgan Stanley: Hello. Good morning, gentlemen. I had a higher level question for you. Is there capacity for Berlin to do further deals here? Or is internal focus fully on the integration of the new mines for now?

Mikael Staffas, President and CEO, Boliden: I will put it this way. Number one, our strategy has always been that we are primarily taking care of what we have, and that’s what we have always focused on. And then we said that we are always willing to look at potential deals if they are value creating. And we’ve also said that you have to be very careful when you do those kind of deals because it’s easy that the deal could be value destructive as well if you’re doing the wrong deal and paying too much. So having said that, right now, our full focus is on taking care of our old 10 units and the two new units that we’ve gotten.

If something were to show up, we will have to look at it. But we’re not seeking any kind of extra growth as of this.

Operator: Next question comes from Chandan R from ZCSD. Please go ahead.

Mikael Staffas, President and CEO, Boliden0: Hi. Can you hear me? Hello? Can you hear me?

Mikael Staffas, President and CEO, Boliden: Yeah. Yes. We hear you.

Mikael Staffas, President and CEO, Boliden0: Hi. Dan Major from UBS. Not quite sure where that name came from. Yes, three questions. Firstly, just to clarify on this depreciation delta, you said Tara is at $100,000,000 and is going to $2.75 over what time frame is that as one part of the question.

And Lundin is $500,000,000 of run rate of depreciation. Is that correct? And then it’s $200,000,000 higher when order gets fully ramped up. Is that the right math on the depreciation?

Hakan Gabriel Son, CFO, Boliden: No. Well, I think there is I mean, the big part here is that Lundin assets in Q2 are running at roughly a SEK 500 per quarter rate, and we expect them to continue to run at that rate. That’s including everything overvalues and so on. Odda, we’re at SEK 50, are now at 100 and are going to end up at about $2.75. Tara, I didn’t mention any numbers.

If I said Tara, then it was clearly a mistake. Tara has a slight increase in depreciation as some of the assets are depreciated based on production volume, but that’s pretty small in the grand scheme of things. And then on top of that, Aitik with the dam investment also has a slight increase.

Mikael Staffas, President and CEO, Boliden: But that’s already in.

Hakan Gabriel Son, CFO, Boliden: That’s already in. Both of those are already in. So the main changes that we’re looking at from now and onwards is that Odda goes up from the run rate of 100 right now to SEK $2.75. Then the rest is in the Q2 books. Okay.

Mikael Staffas, President and CEO, Boliden0: I think that’s clear. Yes. I mean just one other thing, I guess, we’ve asked before, but I think you’re the only mining company that focuses on EBIT, not EBITDA. Have you considered changing that? I certainly think investors would welcome it.

Mikael Staffas, President and CEO, Boliden: Well, you can read EBITDA as well if you if it’s not that we’re making it a big secret. It’s in there. But yes, we have been focusing on EBIT over time. That’s true. Also, yes, go ahead.

Mikael Staffas, President and CEO, Boliden0: Yes. Sorry. Second question, just thinking about the bridge to earnings in Q3 versus Q4. So maintenance of $400,000,000 is a positive. I think it was 150,000,000 advisory charges on the Lindeen deal.

And then you mentioned $300,000,000 of provisional pricing. Are they the main items we should be focusing on beyond the sensitivities and the I

Hakan Gabriel Son, CFO, Boliden: think so. I mean, the grade guidance, we reiterated that. The only thing I could add possibly is on Aitik that the grade guidance for the full year is not changed. It’s the same. I think we will have, according to the latest forecast, also a little bit weaker in Q3 and a bit stronger in Q4.

And then we had a bit I mean, roughly 100 free metals in smelting that is going to be difficult to repeat. So maybe some prudent estimates there will be good. That’s I don’t know if I’m forgetting something, but apart from that, it should be okay.

Mikael Staffas, President and CEO, Boliden: Yes. And maintenance is not zero in Q3 and Q4 either. It’s not so you still have some maintenance even though the SEK 400,000,000 comes away, but there is some more coming back.

Mikael Staffas, President and CEO, Boliden0: Okay. That’s useful. Thank you. And then just final one. Yes.

I noticed the I guess, you’ll give guidance on CapEx later in the year. I noticed the consensus is just under SEK 12,500,000,000.0. Is that a sensible number? Can you walk us through those building blocks that you outlaid at the Capital Markets Day just to be clear?

Hakan Gabriel Son, CFO, Boliden: I think it’s better just to refer back to the presentation done in the Capital Markets Day. I think that’s pretty clear. And then the only thing that has really changed in the outlook since that time is the addition of the two new units, which we have guided for separately in a press release. So I’ll refer back to those.

Operator: The next question comes from Igor Tjubic from DNB Carnegie. Please go ahead.

Adrian Gelani, Analyst, ABG Sundal Collier: Good morning, and thank you, operator. I just have two follow-up questions. The first one is the internal profits. Can you say anything if there are any one offs there? Or is this business as usual, so to say?

And the second one is on the balance sheet. Given that you have increased your debt quite a bit post the acquisition, I just wonder how you are thinking about repaying debt versus focusing on dividends going forward? Thank you.

Mikael Staffas, President and CEO, Boliden: I can take this once I get to play CFO for two seconds as well. The start decreases, right? Yes. On internal profit, just to be very clear, that is a timing issue. So that one should, over time, be zero.

The only thing that’s different this time is that we have this roughly SEK 100,000,000 that has come from the acquisition. They will not go back. We will continue to have those SEK 100,000,000 there. The other roughly SEK 200,000,000 in there is something that is not expected to be happening every time. It’s supposed to be zero over time, which means that you could potentially see that as a positive coming one of the next few quarters.

Regarding the balance sheet and the dividend policy, the dividend policy is very clear and stays at the onethree payout ratio. That is what we’re going to do, and we will use the other money to pay down debt for the time being. And then if it continues to be positive after the debt has come down under 20 percent, including the net reclamation liability, then we will think about other ways of distributing money.

Adrian Gelani, Analyst, ABG Sundal Collier: Okay. Very clear. Thank you. The

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

Mikael Staffas, President and CEO, Boliden1: Yes, thanks for the call. I’ve got three questions. The first one is just on costs. Can you just talk us through if you’re seeing any kind of cost pressure creeping through to the business? I know you have kind of mentioned a bit of it

Ioannis Mazvoulas, Analyst, Morgan Stanley: in

Mikael Staffas, President and CEO, Boliden1: the release, but I’m just interested as to whether you’re seeing any persistent cost inflation pushing through. That’s the first one. The second one is just on the Tara ramp up. So should we expect that mine to be fully ramped up in Q3? And then thirdly, just on Kevitsa grades, you’re running about 13% ahead of your guidance.

So do you think that you’re still happy to expect grades to normalize in H2? Or do you need to go for

Adrian Gelani, Analyst, ABG Sundal Collier: a beat?

Hakan Gabriel Son, CFO, Boliden: Shall I start with cost? Starting with cost. Yes. Now what we’re seeing, if you keep personnel cost and salary apart, roughly zero inflation. So we do not feel cost pressure right now.

Then I can read in the press that there are some speculations about that in general in the market, so we’ll have to see. But currently, it’s about zero inflation for us. Kevitsa grade guidance, the numbers that we’ve guided for holds, so we normalize towards that. And then do you want to take the Tara or

Mikael Staffas, President and CEO, Boliden: No, the Tara ramp up holds as well, and the full year guidance holds of 1.8.

Operator: The next question comes from Krishan Agarwal from Citigroup. Please go ahead.

Krishan Agarwal, Analyst, Citigroup: Hi. A quick follow-up. I mean, there’s been a lot of discussion on depreciation in the call. So in that context, if I see the consensus number, the depreciation is around $8,500,000,000 for the full year. Would you sort of agree with that number?

Hakan Gabriel Son, CFO, Boliden: Well, I think the depreciation to make it very simple, if you take the number that we have in this quarter and then you extrapolate that for the full year, then you’re pretty close. You have to add a little bit SEK 100,000,000 or something for Odda, but then the bigger change in Odda is for next year. So I think this quarter is fairly representative for what we should be for the remainder of the year.

Krishan Agarwal, Analyst, Citigroup: Okay. So 8,500,000 is not million miles apart from your expectations?

Adrian Gelani, Analyst, ABG Sundal Collier: Okay.

Liam Fitzpatrick, Analyst, Deutsche Bank: Okay.

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

Mikael Staffas, President and CEO, Boliden: Well, thank you. Thank you all for listening this morning. I don’t know where it is where you are at, but at least here in Stockholm, it’s a lovely day with the lovely weather. And the Stockholm based crew has probably been waiting to get outside. I just wanted to leave you with the words that we feel stronger than we’ve done in a long time.

We have just done a big acquisition. We have a strong balance sheet, And we feel good about our operations. And I wish you all a very good summer. Bye.

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