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Boliden update
 

Boliden update

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Mining On Top: Stockholm 2013

Mining On Top: Stockholm 2013
26-27 Nov 2013

Boliden update – Lennart Evrell, Boliden; CEO

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    Boliden update Boliden update Presentation Transcript

    • Boliden Lennart Evrell, CEO Intierra/RMG – Mining on top Stockholm 26 November 2013 Boliden Group 1 2013-11-05
    • A European base metals company    Zinc, Copper, Gold, Silver, Lead Mining and Smelting Global leader in e-recycling Kokkola  Harjavalta  In-house project execution resources Tech leader in several fields Aitik Boliden Area Rönnskär Garpenberg Tara Odda Bergsöe Smelters Mines Boliden Group 2 2013-11-05
    • Base metals market Boliden Group 3 2013-11-05
    • Long term demand outlook still looks solid 16 Copper, kg Global population Distr. GDP/Capita Cu kg/capita S Korea 14 >15 23% 12 <5 44% 10 8 5-15 33% Japan 6 EU27 China USA Turkey 4 CIS Mexico Vietnam N11 2 India Indonesia 0 0 5 10 15 20 25 30 35 40 45 50 55 GDP per capita PPP thousand US$ Källa: IMF, Wood Mackenzie Boliden Group 4 2013-11-05
    • New supply in copper Price D S Volume Boliden Group 5 2013-11-05
    • Depletions in zinc Price D S Volume Boliden Group 6 2013-11-05
    • Capital cost for new projects (capital intensity) US$/tonne Cu equivalent Greenfield 30 18 Highly probable 16 Probable 25 14 Possible Extension - mine Extension - mine + mill/Sx-Ew modification Extension - mine +new mill/Sx-Ew ("Greenfield") Restart Historic Base case 20 Brownfield 12 Historic 10 15 8 10 6 4 5 2 0 0 1985-99 2000-2012 Future 1985-99 2000-2012 Future Source: Wood Mackenzie Boliden Group 7 2013-11-05
    • Exploration expenditures – non-ferrous metals bn US$ Distribution by metal 2013 Source: SNL MEG Boliden Group 8 2013-11-05
    • Cash cost development Copper and zinc Copper industry average Zinc industry average 250 70 Realisation 200 60 By products By products Cost to concentrate Cost to concentrate 150 Realisation 50 Cash cost C1 40 Cash cost C1 30 100 20 50 10 0 0 -10 -50 -20 -30 -100 Boliden Group 9 2013-11-05
    • Copper Normal costing cash cost cents/lb C1 + sustainable capex C1 200 150 150 150 150 100 100 100 100 50 50 50 50 0 0 0 0 2000 2013 200 2012 200 2011 200 2010 250 2009 250 2008 250 2007 250 2006 300 2005 300 2004 300 2003 300 2002 350 2001 350 2013 350 2012 350 2011 400 2010 400 2009 400 2008 400 2007 450 2006 450 2005 450 2004 450 2003 500 2002 500 2001 500 2000 500 50th 75th Series1 50th 75th 90th Average price Max price Min price Average price Max price Min price Boliden Group 10 2013-11-05
    • Zinc Normal costing cash cost cents/lb C1 + sustainable capex C1 2013 2012 2011 2013 2010 0 2009 0 2008 0 2007 0 2006 50 2005 50 2004 50 2003 50 2002 100 2001 100 2000 100 2012 100 2011 150 2010 150 2009 150 2008 150 2007 200 2006 200 2005 200 2004 200 2003 250 2002 250 2001 250 2000 250 50th 75th 90th 50th 75th 90th Average price High price Low price Average price High price Low price Boliden Group 11 2013-11-05
    • Head grades are declining Zinc & Lead Copper 1.80 12.0 1.60 10.0 1.40 1.20 8.0 1.00 6.0 0.80 0.60 4.0 0.40 2.0 0.20 0.0 0.00 1990 1995 Boliden Group 2000 2005 2010 2015 2020 2025 1990 12 1995 2000 2005 2010 2015 2020 2013-11-05 2025
    • Mine supply to 2017 Mio tonnes Mine capacity 2013 (pre disruptions) New projects Expansions Mine closures Mine capacity 2017 Av. annual capacity growth Copper 18.1 +2.1 +1.8 -0.7 21.2 +4.1% Zinc 13.7 +0.8 +0.7 -0.8 14.5 +1.4% Estimated metals demand 2013 17.5 12.6 Estimated metals demand 2017 21.8 15.8 +5.5% +5.8% Av. annual demand growth Source: Wood Mackenzie, Boliden calculations Boliden Group 13 2013-11-05
    • Boliden 2012 & Q3 2013 Boliden Group 14 2013-11-05
    • Aitik and Boliden area Boliden area Thousands Aitik 2 500 18 000 16 000 2 000 14 000 12 000 1 500 10 000 8 000 1 000 6 000 4 000 500 2 000 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Inferred Inferred Measured/Indicated Proven/Probable   Measured/Indicated Production*10 Proven/Probable Production*10 Mineral reserves unchanged Mineral resources ‒ Boliden Group  Reserves & resources increased large increase but low grades 15 2013-11-05
    • Garpenberg and Tara Garpenberg Tara 30 000 30 000 25 000 25 000 20 000 20 000 15 000 15 000 10 000 10 000 5 000 5 000 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Inferred Inferred Measured/Indicated Proven/Probable  Measured/Indicated Production*10 Proven/Probable Production*10  Reserves & resources increased Boliden Group 16 Mineral reserves down, slight increase in resources 2013-11-05
    • Benchmark Ranking Quartile Year 2013 (numbers rounded) Industry OP Aitik Percentile % Cu % 1.1 83 0.2 86 98 26 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 $/t $/t $/t $/t 10.2 5.7 20.2 36.1 2.0 1.4 4.6 8.0 12 0 3 2 c/lb Cu 142 138 1st 2nd 51 3rd 4th REVENUE VARIABLES Head Grade Yield ● ● OPERATING VARIABLES Productivity Labour Cost Energy Cost Other Costs Cost To Conc ● ● ● ● ● n n n n CASH COST Cost To Conc 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 Boliden Group 17 2013-11-05
    • Financials January to September MUSD 2012 2011 5,970 6,018 EBITDA ex PIR 919 1,035 EBIT ex PIR 588 747 Revenues PIR=Process Inventory Revaluation USD/SEK =6.70 Boliden Group 18 2013-11-05
    • Q3 Summary   Revenues 8 471 (9 123) MSEK EBIT ex PIR* 603 (988) MSEK ‒ R4Q, MSEK Quarterly EBIT excl PIR* MSEK Rolling Q EBIT, RHS 1 800 7 200 Rolling Q EBIT excl PIR*, RHS EBIT 681 (1 160) MSEK   Free cash flow 436 (310) MSEK Capex, 1 151 (971) MSEK ‒  Smelters improved Mines flat 1,510 in Q2 Expansion projects on plan 1 400 5 600 1 200 4 800 4 000 800 3 200 600 2 400 1 600 200 ‒ ‒ 6 400 400 Vs Q2: 1 600 1 000  800 0 0 Q4 Q1 2010 Q2 Q3 2011 Q4 Q1 Q2 Q3 2012 Q4 Q1 Q2 Q3 2013 * PIR=Process Inventory Revaluation Boliden Group 19 2013-11-05
    • Expansion projects Boliden Group 20 2013-11-05
    • 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 Boliden Group 21 2013-11-05
    • Expansion Garpenberg     From 1.4 to 2.5 mt of ore/year New industrial area New underground facilities and shafts Average reserve grades ‒ Zinc ‒ Lead ‒ Silver 5.1 % 2.0 % 131 g/t  Start first half 2014  2 mt/year 2014, full production end 2015  Capex SEK 3.9 billion Boliden Group 22 2013-11-05
    • Concentrator
    • Grinding 24
    • Flotation
    • Crusher 700 26
    • Summary going forward “2013 the in-between year” Market Boliden        Global macro sideways Demand grows – China drives Growing copper mine supply Zinc supply limited growth Prices flat Strong SEK Boliden Group Aitik ‒     Garpenberg on lower grades in Q4 Rönnskär stability still an issue Strategic hedges expired Expansion projects on plan ‒ ‒ 27 Low grades through 2014 Garpenberg Kokkola 2013-11-05
    • 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.
    • Metals for modern life Boliden Group 29 2013-11-05