Boliden update
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Transcript of Boliden update
Intierra/RMG – Mining on top Stockholm 26 November 2013
Boliden Lennart Evrell, CEO
2013-11-05 1 Boliden Group
A European base metals company
2013-11-05 Boliden Group 2
Aitik
Garpenberg
Tara
Odda
Kokkola
Rönnskär
Bergsöe
Boliden Area
Smelters
Mines
Harjavalta
Zinc, Copper, Gold, Silver, Lead
Mining and Smelting
Global leader in e-recycling
In-house project execution
resources
Tech leader in several fields
Base metals market
3 2013-11-05 Boliden Group
Long term demand outlook still looks solid
2013-11-05 4 Boliden Group
Källa: IMF, Wood Mackenzie
Cu kg/capita
N11
USA
Indonesia
EU27
CIS
China
Japan
India
Vietnam
Mexico
Turkey
S Korea
0
2
4
6
8
10
12
14
16
0 5 10 15 20 25 30 35 40 45 50 55
GDP per capita PPP thousand US$
Copper, kg
< 5 44%
5-15 33%
>15 23%
Global population Distr. GDP/Capita
New supply in copper
2013-11-05 5 Boliden Group
Price
Volume
S D
Depletions in zinc
2013-11-05 6 Boliden Group
Price
Volume
S D
Capital cost for new projects (capital intensity) US$/tonne Cu equivalent
2013-11-05 7 Boliden Group
Source: Wood Mackenzie
0
5
10
15
20
25
30
1985-99 2000-2012 Future
Greenfield
Highly probable
Probable
Possible
Base case
Historic
0
2
4
6
8
10
12
14
16
18
1985-99 2000-2012 Future
Brownfield Extension - mine
Extension - mine + mill/Sx-Ew modification
Extension - mine +new mill/Sx-Ew ("Greenfield")
Restart
Historic
Exploration expenditures – non-ferrous metals bn US$
2013-11-05 8 Boliden Group
Distribution by metal 2013
Source: SNL MEG
Cash cost development Copper and zinc
2013-11-05 9 Boliden Group
-100
-50
0
50
100
150
200
250
Realisation
By products
Cost to concentrate
Cash cost C1
Copper industry average
-30
-20
-10
0
10
20
30
40
50
60
70 Realisation
By products
Cost to concentrate
Cash cost C1
Zinc industry average
Copper Normal costing cash cost cents/lb
2013-11-05 10 Boliden Group
0
50
100
150
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250
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350
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450
500
0
50
100
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350
400
450
500
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
C1 + sustainable capex
50th 75th Series1
Average price Max price Min price
0
50
100
150
200
250
300
350
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450
500
0
50
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350
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450
500
20
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20
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07
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08
20
09
20
10
20
11
20
12
20
13
C1
50th 75th 90th
Average price Max price Min price
Zinc Normal costing cash cost cents/lb
2013-11-05 11 Boliden Group
0
50
100
150
200
250
0
50
100
150
200
250
20
00
20
01
20
02
20
03
20
04
20
05
20
06
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07
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08
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10
20
11
20
12
20
13
C1
50th 75th 90th
Average price High price Low price
0
50
100
150
200
250
0
50
100
150
200
250
20
00
20
01
20
02
20
03
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20
07
20
08
20
09
20
10
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11
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12
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13
C1 + sustainable capex
50th 75th 90th
Average price High price Low price
Head grades are declining
2013-11-05 12 Boliden Group
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
1990 1995 2000 2005 2010 2015 2020 2025
0.0
2.0
4.0
6.0
8.0
10.0
12.0
1990 1995 2000 2005 2010 2015 2020 2025
Zinc & Lead Copper
Mine supply to 2017
2013-11-05 13 Boliden Group
Source: Wood Mackenzie, Boliden calculations
Mio tonnes Copper Zinc
Mine capacity 2013 (pre disruptions) 18.1 13.7
New projects +2.1 +0.8
Expansions +1.8 +0.7
Mine closures -0.7 -0.8
Mine capacity 2017 21.2 14.5
Av. annual capacity growth +4.1% +1.4%
Estimated metals demand 2013 17.5 12.6
Estimated metals demand 2017 21.8 15.8
Av. annual demand growth +5.5% +5.8%
Boliden 2012 & Q3 2013
2013-11-05 14 Boliden Group
Aitik and Boliden area
Mineral reserves unchanged
Mineral resources ‒ large increase but low grades
Reserves & resources increased
Boliden area Aitik
0
500
1 000
1 500
2 000
2 500
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Thousands
Inferred Measured/Indicated
Proven/Probable Production*10
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Inferred Measured/Indicated
Proven/Probable Production*10
2013-11-05 15 Boliden Group
Garpenberg and Tara
Reserves & resources increased Mineral reserves down, slight increase
in resources
Garpenberg Tara
0
5 000
10 000
15 000
20 000
25 000
30 000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Inferred Measured/Indicated
Proven/Probable Production*10
0
5 000
10 000
15 000
20 000
25 000
30 000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Inferred Measured/Indicated
Proven/Probable Production*10
2013-11-05 16 Boliden Group
Benchmark Ranking Quartile
Year 2013 (numbers rounded) Industry OP Aitik Percentile 1st 2nd 3rd 4th
REVENUE VARIABLES Head Grade % Cu 1.1 0.2 98 ●
Yield % 83 86 26 ●
OPERATING VARIABLES Productivity
Mine t ore/hour 12 40 1 ●
Mill t ore/hour 26 166 0 ●
G&A t ore/hour 53 583 0 ●
Overall t ore/hour 6 31 0 ●
Wage Rate $/hour 31 61 91 ●
Labour Cost $/t 10.2 2.0 12 n Energy Cost $/t 5.7 1.4 0 n Other Costs $/t 20.2 4.6 3 n Cost To Conc $/t 36.1 8.0 2 n
CASH COST
Cost To Conc c/lb Cu 142 138 51 n
Freight c/lb Cu 7 3 34 ●
TC/RC c/lb Cu 27 22 61 ●
Realisation c/lb Cu 34 25 31 n
C1 Cost c/lb Cu 177 163 47 n
Source: Wood Mackenzie
2013-11-05 17 Boliden Group
MUSD 2012 2011
Revenues 5,970 6,018
EBITDA ex PIR 919 1,035
EBIT ex PIR 588 747
Financials January to September
2013-11-05 18 Boliden Group
PIR=Process Inventory Revaluation USD/SEK =6.70
0
800
1 600
2 400
3 200
4 000
4 800
5 600
6 400
7 200
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013
R4Q, MSEK MSEK
Quarterly EBIT excl PIR*
Rolling Q EBIT, RHS
Rolling Q EBIT excl PIR*, RHS
Q3 Summary
Revenues 8 471 (9 123) MSEK
EBIT ex PIR* 603 (988) MSEK
‒ EBIT 681 (1 160) MSEK
Vs Q2:
‒ Smelters improved
‒ Mines flat
Free cash flow 436 (310) MSEK
Capex, 1 151 (971) MSEK
‒ 1,510 in Q2
Expansion projects on plan
2013-11-05 Boliden Group 19
* PIR=Process Inventory Revaluation
Expansion projects
2013-11-05 20 Boliden Group
Project update
Aitik mine production R4Q 34,9 Mt - 37,0 pace in Q3
Silver recovery Kokkola on plan
‒ Start-up Q3 2014
Garpenberg on plan
‒ Underground infrastructure, shafts, concentrator
‒ Start-up first half 2014, full production end 2015
Aitik45 feasibility study
‒ Environmental permit application submitted end of 2012
Laver conceptual study
‒ Ore milling test runs
2013-11-05 21 Boliden Group
Expansion Garpenberg
From 1.4 to 2.5 mt of ore/year
New industrial area
New underground facilities and shafts
Average reserve grades
‒ Zinc 5.1 %
‒ Lead 2.0 %
‒ Silver 131 g/t
Start first half 2014
2 mt/year 2014, full production end 2015
Capex SEK 3.9 billion
2013-11-05 Boliden Group 22
Concentrator
24
Grinding
Flotation
26
Crusher 700
Summary going forward “2013 the in-between year”
Market
Global macro sideways
Demand grows – China drives
Growing copper mine supply
Zinc supply limited growth
Prices flat
Strong SEK
Boliden
Aitik ‒ Low grades through 2014
Garpenberg on lower grades in Q4
Rönnskär stability still an issue
Strategic hedges expired
Expansion projects on plan ‒ Garpenberg
‒ Kokkola
2013-11-05 Boliden Group 27
Disclaimer
This presentation has been prepared by Boliden for information purposes only. Nothing in this material shall be construed as an offer or solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction.
This presentation has been prepared as per the indicated date and Boliden does not undertake any obligation to correct or update the information or any statements made therein. Views that may have been expressed may be subject to change without notice.
Certain statements in this presentation are forward-looking and are based on plans, estimates, assumptions, projections and expectations and are subject to risks and uncertainties. In addition to the factors explicitly discussed, other circumstances may also have a material effect on the actual outcome. Such factors include, but are not limited to, general economic or political conditions, fluctuations in exchange or interest rates or metal prices, technological factors, interruptions in supply or production, actions of courts, regulators, governmental agencies, competitors, customers, suppliers, employees or other third parties.
Nothing contained herein shall constitute any representation or warranty as to the accuracy or completeness and Boliden accepts no responsibility or liability as to the accuracy or completeness of the information contained herein. The material may include information from third party sources believed to be reliable. However, Boliden has not made an independent verification of the information provided.
Save as by prior approval in writing, this material may not be copied, transmitted or disclosed, whether in print, electronic or any other format. All rights to the material are reserved.
Boliden does not accept any liability whatsoever for any direct, indirect, consequential or other loss arising from or in connection with any use of this information.
This material has not been reviewed, registered or approved by any authority under any applicable laws.
2013-11-05 29 Boliden Group
Metals for modern life