Earnings call transcript: Boliden Q2 2025 sees strong cash flow amid currency challenges

Boliden AB reported its Q2 2025 earnings, highlighting a robust free cash flow of 2 billion SEK despite a significant negative currency impact of 600 million SEK. The company’s strong operational performance was marked by record production at the Aitik mine and successful integration of newly acquired Lundin mines. According to InvestingPro data, the stock’s RSI indicates overbought territory, with the price declining 1.34% following the earnings announcement, closing at 418.6 SEK, near its 52-week high.

Key Takeaways

• Boliden generated a free cash flow of 2 billion SEK in Q2 2025.
• The company faced a negative currency impact of 600 million SEK.
• Record production was achieved at the Aitik mine.
• Stock price fell by 1.34% following the earnings release.
• Full-year guidance was reiterated with a minor zinc grade adjustment.

Company Performance

Boliden’s performance in Q2 2025 was characterized by strong operational achievements and effective cost management. The company maintained a net debt to equity ratio below 30% following recent acquisitions. The mining segment delivered 1 billion SEK, while the smelters segment contributed close to 600 million SEK. InvestingPro analysis shows an impressive Financial Health Score of 3.02 (rated as "GREAT"), with particularly strong metrics in profitability and relative value. Despite the currency headwinds, Boliden’s balance sheet remained strong, supporting its competitive position in the industry.

Financial Highlights

• EBIT excluding process inventories: 1.3 billion SEK
• Free cash flow: 2 billion SEK
• Mines segment contribution: 1 billion SEK
• Smelters segment contribution: 600 million SEK
• Net debt to equity ratio: below 30%

Outlook & Guidance

Boliden reiterated its full-year guidance with a slight adjustment in zinc grades at the Garpenberg mine. The company expects the Odda smelter to contribute to earnings from Q4 2025, with full depreciation anticipated at around 275 million SEK per quarter. A consolidated guidance update is scheduled for December. Three analysts have recently revised their earnings estimates upward for the upcoming period, according to InvestingPro data, which offers comprehensive analysis through its Pro Research Reports, available for over 1,400 top stocks.

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 unsustainable levels of current copper treatment charges, emphasizing the need for industry adjustments. Staffas also noted the company’s strong balance sheet post-acquisition, which positions Boliden well for future growth.

Risks and Challenges

• Currency fluctuations: The significant negative currency impact in Q2 indicates potential ongoing challenges.
• Zinc price volatility: Lower zinc prices could affect future revenues.
• Copper treatment charges: Extremely low charges pose sustainability concerns for the industry.
• Slower mining development: Issues at the Garpenberg and Tara mines may impact production targets.
• Market conditions: The challenging nickel market environment could pressure margins.

Q&A

During the earnings call, analysts inquired about the slower sill pillar mining at Garpenberg and the potential for further acquisitions. CEO Mikael Staffas addressed these concerns, providing clarity on the company’s strategic direction and ongoing operational efficiencies. Additionally, questions regarding insurance cash flow and depreciation changes from new assets were discussed, offering insights into Boliden’s financial management strategies.

Full transcript - Boliden AB (BOL) Q2 2025:

Olof Grenmark, Head of Investor Relations, Boliden: Ladies and gentlemen, I’d like to welcome you to Boliden’s Q2 2025 results presentation. My name is Olof Grenmark 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 Håkan Gabrielsson. We will also have a Q&A session which will be led by the operator Michael. Welcome.

Mikael Staffas, President and CEO, Boliden: Thank you, Olof. 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 quarter report that we have just released. If you look at the highlights, we had a profit excluding inventory valuation of almost SEK 1.3 billion. There’s been quite a lot of accounting going on in this quarter and Håkan 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 SEK 600 million 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. 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. 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 coming forward. We’ve included the two Lundin mines as of this quarter or as of April 16th to be more exact. The integration is going fine and we’re moving along well there as well. This also creates some accounting issues, but Håkan will clear that all out for you as it 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 40 million ton pace right now. We have been able and 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 and they’re going on according to plan as we have presented them in the capital markets day back in March.

The financial performance talked about just shy of SEK 1.3 billion in there. There is a real comparison issue which is linked to the one-off cost for advisors etc. linked to the acquisition and the equity raise that we did with the Lundin assets. We had the planned maintenance at SEK 400 million EBIT impact, just as it was communicated. Free cash flow, if you exclude the proceeds for the acquisition, was at SEK 2 billion. 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 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 Rönnskär tankhouse well on track. We will see the ramp-up here in the second half of next year. The Itik dam is already completed. You can see it’s already history.

We did mention it here that we actually now have all the permits in place. When we did the Itik 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 good 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. This one we are 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. Here you have to remember that we’re now including two more units into this one and that we will of course also 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 12-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. Now finally we’re seeing trends coming in the right direction. Let’s hope that we can keep that trend in place.

It’s important to understand that Somincor and Zinkgruvan are included in the last quarter but we have not recalculated the numbers here for historical periods. On the market side, 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 recovered in the later part of the quarter, whereas the exchange rates for the dollar have continued to be weaker than we’ve been used to. 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. 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.

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. 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 are not sustainable for the industry as such. Even though the miners right now have a very good time, the by-products including sulphuric acid prices have been quite stable for us as well. If you look generally at 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 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. Do remember that the high gold price is part of this and also the low copper treatment charges 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, as 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 treatment charges are helping to get the cost level down.

It is not so much that the mining around the world are that good at taking out cost. 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 has been going on and it’s now on a level. 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 Zinkgruvan and Somincor as they have produced during the 10 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, copper gets some help from Somincor and nickel is, of course, only Kevitsa that pushes. Having said that, we’ve had a relatively strong production in all the mines. It is in line with what we guided for in the 40 million pace as we can have now with the diorite issue. Recoveries are going the right direction and better than they were in Q1. Still a little bit to go to get back to the normal levels. 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 high grade sill pillar mining 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. 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 sill pillar mining in the very short term. Garpenberg has strong production, also relatively good grades. The Boliden area, very stable production, good grades even though they’re lower than last year. Last year was crazy high grades in the Boliden area. In Tara, the ramp-up is going on. Somincor, stable production.

We’ve had some issues, as you all read about, the big power outage in the Iberian Peninsula. We had a separate power outage which was more local around Somincor that has impacted negatively, but otherwise generally 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&R statement, but not really much around that. On the smelter side, also good production. Rönnskär, strong and stable production. We’ve managed to find absolutely the right feed for Rönnskär. We have very strong free metal coming out of Rönnskär 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 of that, you know, as with these free metals, part of that is linked to inventory and inventory measurement.

We have done some inventory and been able to adjust positively according to that major maintenance stop. Apart from that, also good production around that, 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. Very strong performance there. In Odda, we’re moving the right direction in terms of getting up to the 200, as you know, from 160 to 250, that is progressing well. Although we did have an unplanned maintenance situation around that, otherwise well around that. As we come into the fall, we’ll start looking at the 350 level. Also, Baise, small but very strong production in this quarter. With that, financial summary. Håkan, please.

Håkan Gabrielsson, CFO, Boliden: Thank you Mikael and good morning. As you have seen, we have reported an EBIT result excluding process inventories just shy of SEK 1.3 billion 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 as usual in the summer months or summer quarters, high planned maintenance. This is down compared to last year. Bear in mind though that last year had SEK 2.4 billion insurance income included in the result. Capital expenditure is at SEK 4.2 billion, 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 billion, excluding the cost of the acquisition of Somincor and Zinkgruvan. 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 billion, relatively stable compared to the comparisons. Smelters, a really strong quarter at SEK 600 million, close to SEK 600 million. This is in a quarter where we have the full quarterly impact of the lower treatment charges, high planned maintenance. 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, that’s mainly the internal profit elimination that we do, which is a timing adjustment connected to revenue recognition. That is a negative SEK 300 million in there.

There is about SEK 100 million that is an internal profit elimination connected to the new mines Somincor and Zinkgruvan, 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 million. Treatment charges negative about SEK 300 million. Compared to last year, we have a good development on metal prices and in particular precious metals, which improved by about SEK 700 million. We also had a good run on by-products. Volumes are up by a bit more than SEK 1 billion, 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. That makes a fairly big difference here in this line. Costs are up again due to Somincor and Zinkgruvan being consolidated and also due to the ramp-up of the Tara mine. We also had a bit more maintenance cost in smelters compared to last year. Depreciation up SEK 700 million. Here the new units account for almost SEK 500 million, Somincor and Zinkgruvan. We also have increases in Tara or the Itik dam as a result of recent investments and the ramp-up of Tara and Odda. Just putting some numbers on that, last year we were running at SEK 50 million per quarter depreciation. This quarter we are running at SEK 100 million.

As the project is fully commissioned, the G0 expansion project is fully commissioned, I expect that number to come up further to about SEK 275 million per quarter. Of course, I’ve commented on the items affecting comparability and that’s included in this comparison as well. Looking at quarter per quarter here, we see a significant price reduction. Dollar is the main part, roughly SEK 650 million negative. Copper treatment charges going from half of the impact in Q1 to fully impact in Q2, that makes up about SEK 150 million. Metals all put together is about SEK 100 million 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 million from that.

That was largely countered by a good development on precious metals, which contributed by about SEK 250 million in this quarter compared to Q1. All in all, a fairly big change mainly attributable to dollar. Volumes were up. We had the impact of the Somincor and Zinkgruvan being consolidated. We had some negative internal profit as I commented. We also had a strong development of free metal contributions in smelters. That was a mix of a number of reasons. One is the relatively favorable concentrate mix in the quarter. We’ve had good recoveries in production in the smelters. There is also a positive component from the stock take where we actually had more metals than anticipated. Really strong performance in smelters in that respect. On the cost side, again, mostly related to the changes, mostly related to Somincor and Zinkgruvan plus a little bit more plant maintenance in smelters.

Items affecting comparability here is mainly the transaction cost for Somincor and Zinkgruvan 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, SEK 2 billion. If we back out the cost for the acquisition of the two new mines, we had cash flow of about SEK 3.5 billion each from EBITDA and from working capital. In particular, the working capital is good. It is true that we were helped in there with about SEK 1 billion 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. It was still well-managed inventory positions during the maintenance stops in smelter. 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 billion, capital employed to close to SEK 100 billion, and also the net reclamation liability is coming up from 6% to 8%. That’s all impact from the two acquisitions, the acquired mines. We are really happy that we have been able to maintain a net debt to equity at below 30% this close to an acquisition. That is a position of strength and we have a robust balance sheet. I’m very happy with that. For the outlook, I hand over again to you, Mikael.

Mikael Staffas, President and CEO, Boliden: Thank you, Håkan. 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 for zinc, I should say in Garpenberg, from 3.3% to 3.1%. This is more in line with what we have been mining the last couple of years, the last couple of quarters. I should say this is mainly due to that we’re having some very high grade stopes in the sill pillar mining area. As you know, sill pillar mining is always dependent on having good ground conditions, and we’ve had issues with that. 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 is all going to come out at some stage from the mine, but in the meantime it’s going slower, and we have been able or we’ve been forced to move over to other areas to cover the volume, areas that have lower grade. Apart from that, there is basically no change regarding the calendar. There’s not much to talk about. 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, you know, 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. 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 in in Q3, like CapEx and so on, and things that used to come in Q4, like the maintenance stops, all in one shot coming in early December. 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 not be anything new.

With that, I’ll just reiterate while we’re on this planet, our purpose, our vision, and our values. With that, I’m open to take questions.

Operator: If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 5 again on your telephone keypad. The next question comes from Marina Calero from RBC Capital Markets. Please go ahead.

Good morning, thanks for the call. Two questions on my side. The first one on the new assets, Somincor and Zinkgruvan. 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? My second question is on working capital. Assuming prices still 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.

Håkan Gabrielsson, CFO, Boliden: Okay. 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 $350 million per year as a five year average at consensus prices and current prices are a bit lower than that, having an impact roughly of SEK 150 million. We are a bit lower than our long term outlook due to prices, in particular the dollar. 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 Zinkgruvan. It’s still a fairly limited impact. The guidance is still solid. Working capital, we released this quarter SEK 3.5 billion 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 billion this quarter. I expect SEK 300 million, so that’s a reduction of SEK 700 million. We were helped a bit by the reduction of prices, which hopefully will not happen in Q3. It will be a substantially lower number. I still think that we should not tie too much more working capital. My best estimate for the working capital development is flat roughly compared to where we stand right now.

Understood. Thank you very much.

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

Yes, hello, good morning.

Olof Grenmark, Head of Investor Relations, Boliden: My first question is what really was the issue here with Garpenberg.

That caused you to lower the grade guidance. 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 sill pillar mining that has been going on for quite some time. For those of you who don’t know what sill pillar is, that is that we have mined in one area and we have mined below. There is a piece in between these two areas that was left in earlier time. 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. We have not been able to mine this area as quickly as we would have liked to. It is a high grade area. We have alternative stopes to go to, alternative positions, but they are at lower grade.

It is possible when you run into these problems that you might sterilize a mine, that is, that you run into rock mechanical problems which means that you can never mine there because there was. That’s not the issue for us. We’re still in an area. We’re going to get all that zinc out of the Garpenberg mine. It’s just going to take a longer time.

Olof Grenmark, Head of Investor Relations, Boliden: Okay, understood.

In Aitik, should we expect any notable improvements in the recoveries for the second half of the year? I think you mentioned it in passing.

That you’re 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. Yes, you can see there’s already been quite an improvement from Q1 to Q2, even though we’re still below historical levels. We should be able in the second half, if not quite at historical level, at least get quite a bit closer to historical levels.

Olof Grenmark, Head of Investor Relations, Boliden: Okay, understood. Finally, just a housekeeping question. Can you remind us how much of.

The insurance cash flow is left when that will happen?

Håkan Gabrielsson, CFO, Boliden: I can do that. It should be. I’m looking at all over here to do it, but we should have about SEK 350 million per quarter in Q2, and sorry, in Q3 and Q4. There’s about SEK 300 million left for next year.

Mikael Staffas, President and CEO, Boliden: About a billion left, right?

Håkan Gabrielsson, CFO, Boliden: Correct.

Olof Grenmark, Head of Investor Relations, Boliden: Okay, thank you.

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

Olof Grenmark, Head of Investor Relations, Boliden: Good morning. One question on Garpenberg and then another one on Itik. On Garpenberg, can you just give us an update on the permitting process and the timing there? In relation to this ground issue that you’re encountering at the moment, is this just short term or could this persist into 2026? On Itik, you’re sounding more confident just in terms of the amount.

Of.

The amount of material that you’re moving and completing the tailings dam, are you still of the view that you’re going to remain some way below the 45 million ton nameplate for the next few years, or could there be upside to that in terms of getting up to 45 million tons within, say, the next one to two years? Thank you.

Mikael Staffas, President and CEO, Boliden: If we start with the last one, we haven’t guided for anything beyond this year. It’s 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 diorite situation, how quickly that one is moving on. I’ll leave you with that then. You had Garpenberg permits. We are moving on and we hope to get a permit for the increased level to 4.5 million before the end of the year. We are not sure that we will get it, but we are still hopeful that that will happen. We are relatively sure that we’ll get the permit, but it’s a timing that is a little bit unclear.

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

Olof Grenmark, Head of Investor Relations, Boliden: Is it just an impact on 2025, or could it extend into 2026?

Mikael Staffas, President and CEO, Boliden: There are two different answers to that one. Number one is that of course what’s happening in 2025 is actually improving 2026 because we’re saving some high grade areas till next year. That doesn’t necessarily, I need to be very clear about 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. Of course this is helping. Then comes the question whether next year, where we have other sill pillar mining, whether that will be affected by this thing being slowed down. This should also be viewed in light of the fact 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.

Olof Grenmark, Head of Investor Relations, Boliden: Okay, thank you.

Thank you.

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

Hi, thanks a lot for taking my question. A quick follow-up on the working capital. Håkan mentioned that working capital flat is kind of a good assumption for the second half. You’re also saying SEK 700 million will be insurance claim into that. Is it fair to assume that underlying business will have a slight amount of working capital build and hence full year probably may also be a flat working capital development excluding the insurance?

Håkan Gabrielsson, CFO, Boliden: 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 that to be true this year as well. Everything related to working capital for Zinkgruvan and Somincor is already in, so that is not a change. There will be some working capital build in Odda once all that is ramped up. Being a zinc smelter, it’s still on a fairly modest level compared to the inventory build you see in a copper smelter. Let’s say SEK 0.5 billion or something like that. That is the magnitude we’re talking about. I still think that the overall picture holds, you know, flat Q3 and then some release in Q4.

Okay, that’s very clear. A question on free metals. The free metal recovery you are attributing to a bit of an inventory adjustment and higher pricing. Should we read this in a way that at current gold and silver pricing, recovery 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?

Håkan Gabrielsson, CFO, Boliden: Not sure. Did you ask about whether the current level of free metals is sustainable?

Yes, yes.

Yeah. Okay. I think there is. We talked about some one-offs and I think that accounts to about SEK 100 million. Apart from that, I mean it is sustainable. In particular, once we get to the point where we’re ramping up the new tankhouse in Rönnskär, which will happen next year, we should see a substantial improvement. We’ve been talking about roughly SEK 1 billion per year previously. With current gold prices, it might even be more than that.

Yeah, no, that’s very clear. My last question is on Odda. 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 contributions from Q4. Exactly how much? I don’t know if we have guided for, but there will be clearly contributions coming in.

Thanks a lot.

Thank you.

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

Olof Grenmark, Head of Investor Relations, Boliden: Yeah, good morning gentlemen. A couple of questions. First question was about Tara. Where production actually went down quarter on quarter when the mine’s supposed to be ramping up. Just wondering what happened there. 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. Thanks very much.

Mikael Staffas, President and CEO, Boliden: On the second one, I don’t think we’re going to guide you much more than what Håkan just said that the number that we have given of $300, $350 per year, 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. Of course, you have to make the correction from having 10 weeks going up to 13 weeks. Of course, it’s 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. 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. All in all, this should not change the guidance for the whole year. There’s been a little bit of that. We’ve been slow at getting the new development up to the real pace, and that is what has hindered us during Q2.

Håkan Gabrielsson, 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. As a part of the accounting here of the acquired units, we do not have any goodwill or any assets that are never depreciated. We’re depreciating the full acquisition price over time. In this quarter, we had close to SEK 500 million in depreciation. That, of course, has an impact on the level of the EBIT contribution. EBITDA is then, as we said, roughly SEK 150 million away from what we have seen in our business case and what we guided for externally.

Mikael Staffas, President and CEO, Boliden: Good.

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

Olof Grenmark, Head of Investor Relations, Boliden: 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. Can you remind us which quarter you actually expect to get the full contribution during 2026? 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 2016 regarding depreciations.

Olof Grenmark, Head of Investor Relations, Boliden: Yeah.

Håkan Gabrielsson, CFO, Boliden: The full impact should be about SEK 275 million per quarter. When I say full impact, that’s the full depreciation of the Odda site. Out of that, SEK 50 million per quarter was the run rate before the expansion, so a little bit more than SEK 200 million extra per quarter is what we’re looking at.

Olof Grenmark, Head of Investor Relations, Boliden: Very clear. Thank you. Second question on the copper treatment charges. Mikael, you mentioned that the depressed TCs we’ve seen are problematic for the smelting industry. Are we at a pain point that we’re going to see some curtailments across the industry, or is 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? 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 is happening in the rest of the industry. You’re right that we don’t see the curtailments. 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, you know, might not be willing as of yet, at least, to take the downtime. That’s also expensive if you run a smelter. 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 price, is still on an unsustainable level. Regarding, you know, TCs 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.

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.

Olof Grenmark, Head of Investor Relations, Boliden: Thanks for that. Maybe just the last one. On the guidance that you will release in December, you mentioned it’s going to be harmonized across the assets. Out of curiosity, are you looking to stick with the traditional Boliden 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.

Very well.

Olof Grenmark, Head of Investor Relations, Boliden: Thanks so much.

Mikael Staffas, President and CEO, Boliden: Thank you.

Operator: The next question comes from Pavel Kirjanovs from BofA Securities. Please go ahead.

Olof Grenmark, Head of Investor Relations, Boliden: Hello, good morning gentlemen. I had a higher level question for you. Is there capacity for Boliden 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 would 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. We said that we are always willing to look at potential deals if they are value creating. 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. 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. We’re not seeking any kind of extra growth as of this.

Thank you.

Operator: The next question comes from Chandan R. from Citigroup. Please go ahead.

Hi, can you hear me? Hello, can you hear me?

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

Hi, it’s Daniel Major from UBS. Not quite sure where that name came from. Thanks. Yeah, three questions my side. Firstly, just to clarify on this depreciation delta, you said Tara is at SEK 100 million. It’s going to SEK 275 million over what time frame is that as one part of the question? Lundin is SEK 500 million of run rate of depreciation, is that correct? It’s SEK 200 million higher when Odda gets fully ramped up. Is that the right maths on the depreciation now?

Håkan Gabrielsson, CFO, Boliden: I think there is. I mean the big parts here is that Lundin assets in Q2 are running at roughly a SEK 500 million per quarter rate and we expect them to continue to run at that rate. That’s including, you know, everything, overvalues and so on. Odda were at SEK 50 million, are now at SEK 100 million and are going to end up at about SEK 275 million. 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. That’s pretty small in the grand scheme of things. On top of that, Itik with the dam investment also has a slight increase.

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

Håkan Gabrielsson, CFO, Boliden: That’s already in. Both of those are already in. The main changes that we’re looking at from now and onwards are that Odda goes up from the run rate of 100 right now to 275, and the rest is in the Q2 books.

Okay, I think that’s clear. I mean, just one 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: You can read EBITDA as well. It’s not that we’re making it a big secret. It’s in there. Yes, we have been focusing on EBIT over time. That’s true also. Yeah, go ahead.

Yes, sorry. The second question, just thinking about the bridge to earnings in Q3 versus Q4. Maintenance of SEK 400 million is positive. I think it was SEK 150 million advisory charges on the Lundin deal, and then you mentioned SEK 300 million of provisional pricing. Are they the main items we should be focusing on beyond the sensitivities?

Håkan Gabrielsson, CFO, Boliden: I think so. I mean the grade guidance, we reiterated that. The only thing I could add possibly is, I think 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. We had a bit, I mean roughly SEK 100 million free metals in smelting that is going to be difficult to repeat. Maybe some prudent estimates there will be good. I don’t know if I’m forgetting something, but apart from that it should be okay.

Mikael Staffas, President and CEO, Boliden: Yeah. Maintenance is not zero in Q3 and Q4 either. It’s not. You still have some maintenance even though the 400 comes away, but there is some more coming back.

Okay, that’s useful. Thank you. Just a final one. I noticed you’ll give guidance on CapEx later in the year. I noticed the consensus is just under SEK 12.5 billion. 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.

Håkan Gabrielsson, 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. 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. I’ll refer back to those.

Okay, thank you.

Operator: The next question comes from Igor Tubic from Carnegie Investment Bank. Please go ahead.

Olof Grenmark, Head of Investor Relations, Boliden: 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, should say. 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. Yes. On internal profit, just to be very clear, that is a timing issue. That one should over time be zero. The only thing that’s different this time is that we have this roughly SEK 100 million that has come from the acquisition. They will not go back. We will continue to have those SEK 100 million there. The other roughly SEK 200 million in there is something that is not expected to be, you know, 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 one-third payout ratio. That is what we’re going to do.

We will use the other money to pay down debt for the time being. If it continues to be positive after the debt has come down under 20%, including the net reclamation liability, then we will think about other ways of distributing money. Okay, very clear.

Thank you.

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

Yeah, 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 in 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. Should we expect that mine to be fully ramped up in Q3? Thirdly, just on Kivitsa grades, you’re running about 13% ahead of your guidance. Do you think that you’re still happy to expect grades to normalize in H2, or do you think there’s scope for a beat? Thanks.

Håkan Gabrielsson, CFO, Boliden: Shall I start with cost?

Mikael Staffas, President and CEO, Boliden: Start you with cost.

Håkan Gabrielsson, CFO, Boliden: Now, what we’re seeing if you keep personnel cost and salary apart, is roughly zero inflation. We do not feel cost pressure right now. I can read in the press that there are some speculations about that generally in the market, so we’ll have to see. Currently it’s about zero inflation for us. Kevin’s a great guidance. The numbers that we’ve guided for holds, so we’ll normalize towards that. Do you want to take.

Mikael Staffas, President and CEO, Boliden: The Tara ramp-up holds as well, and the full year guidance holds at 1.8.

Thank you.

Operator: As a reminder, if you wish to ask a question, please dial 5 on your telephone keypad. The next question comes from Krishan Agarwal from Citigroup. Please go ahead.

Hi. A quick follow-up. I mean, there’s been a lot of discussion on depreciation in the call. In that context, if I see the consensus number, the depreciation is around SEK 8.5 billion for the full year. Would you sort of agree with that number?

Håkan Gabrielsson, CFO, Boliden: 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, 100 or something for Odda, but the bigger change in Odda is for next year. I think this quarter is fairly representative for what we should be for the remainder of the year.

Okay, so eight and a half is not a million miles apart from your expectations.

Olof Grenmark, Head of Investor Relations, Boliden: Okay? Okay.

Mikael Staffas, President and CEO, Boliden: 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: 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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