Interim report - Bolideninvestors.boliden.com/sites/default/files/event/boliden-q312... · Industrial production China Boliden Group Q3 2012 7 2012-10-25 -60 -40 -20 0 20 40 60 80

Interim report January – Sept 2012

Lennart Evrell President & CEO

Mikael Staffas CFO

Q3 Summary

Market uncertainty Revenues 9,123 (10,553) MSEK EBIT ex PIR* 974 (1,397) MSEK

‒ EBIT 1,146 (1,180) MSEK Free Cash Flow 310 (820) MSEK Lower head grades in zinc mines Cost control Expansion projects on plan

Write-down -79 MSEK Positive end-of-period price effects

2012-10-25 Boliden Group Q3 2012 2

* PIR=Process Inventory Revaluation

0

1 000

2 000

3 000

4 000

5 000

6 000

0

500

1 000

1 500

2 000

2 500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2009 2010 2011 2012

Msek

Quarterly EBIT

Quarterly EBIT excl PIR* Rolling Q EBIT excl PIR*

The Market

2012-10-25 Boliden Group Q3 2012 3

Industrial production Year on year %

2012-10-25 4 Boliden Group Q3 2012

-25

-20

-15

-10

-5

0

5

10

15

20

25

USA Euro Area China World

-25

-20

-15

-10

-5

0

5

10

15

20

25

Brazil Russia India China BRIC Total

Boliden calculation of BRIC IP Boliden calculation of world IP

Construction Year on year %

2012-10-25 5 Boliden Group Q3 2012

-30

-20

-10

0

10

20

30

40

USA EU27 China

USA: construction spending value EU27: Index construction production China: fixed asset investments - cumulative value

Car production Year on year %

2012-10-25 6 Boliden Group Q3 2012

-30

-20

-10

0

10

20

30

40

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12

China

Germany

USA

Source: Reuters Datastream, Wards Automotive USA: light vehicles

Industrial production China

2012-10-25 7 Boliden Group Q3 2012

-60

-40

-20

0

20

40

60

80

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2010 2011 2012

Year on year %

Steel wire rod Power cable Galvanized steel sheet

Steel sections Motor vehicles Cement

Railway steel Total construction production volume

Source: Thomson Reuters Datastream, Boliden Research

Zinc price and inventories

2012-10-25 Boliden Group Q3 2012 8

Zinc price (LME average)

USD/t Q3-12 vs period

Q3 11 2,224 -15%

Q4 11 1,897 -1%

Q1 12 2,025 -7%

Q2 12 1,928 -2%

Q3 12 1,885 -

Global zinc demand YoY up 2% End Q2 to end Q3:

‒ Price up 13% ‒ Inventories down 3%

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

USD/t TonnesLME Inventory Shanghai Inventory Price Price Q avg

1 700

1 750

1 800

1 850

1 900

1 950

2 000

2 050

2 100

2 150

31-aug 07-sep 14-sep 21-sep 28-sep 05-okt 12-okt 19-okt

USD/tonne

Zinc TC and premiums

Spot TC improving Lower concentrate demand from

Chinese smelters

Zinc premium stable in Europe

2012-10-25 Boliden Group Q3 2012 9

0

50

100

150

200

250

300

350

400

USD/t metal

Europe ex-works US Midwest Delivered Far East (Western)

Source: © CRU (www.crugroup.com)

0

50

100

150

200

250

300

350

400

USD/t concentrate

Realised TC (including price participation) Spot TC - outturn

Source: © CRU (www.crugroup.com)

Copper price and inventories

2012-10-25 Boliden Group Q3 2012 10

Global copper demand YoY up1% End Q2 to end Q3:

‒ Price up by 9% ‒ Inventories down 3%

Copper price (LME average)

USD/t Q3-12 vs period

Q3 11 8,982 -14%

Q4 11 7,489 +3%

Q1 12 8,310 -7%

Q2 12 7,869 -2%

Q3 12 7,706 -

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

11 000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

TonnesUSD/t LME Inventory Shanghai Inventory COMEX Inventory Price Price Q avg

7 200

7 400

7 600

7 800

8 000

8 200

8 400

8 600

31-aug 07-sep 14-sep 21-sep 28-sep 05-okt 12-okt 19-okt

USD/Tonne

Copper TC and premiums

Spot TC improving Low volumes, single trades influence

Copper premium down Weaker demand in Europe

2012-10-25 Boliden Group Q3 2012 11

0

20

40

60

80

100

120

140

USD/t metal

Spot Copper premium CIF W. Europe Benchmark CIF Europe

0

20

40

60

80

100

120

USD/t concentrate

Standard grade spot TC US$/dmt TC annual and mid-year benchmark contract

Source: © CRU Sep 2012 (www.crugroup.com)

Gold, Silver and Lead prices

2012-10-25 12 Boliden Group Q3 2012

Average prices Q3 2012 vs period

Q3-11 Q2-12

Gold -3% +3%

Silver -23% +1%

Lead -20% 0%

Gold

Lead

Silver

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

USD/oz

0

10

20

30

40

50

60

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

USD/oz

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

USD/t Tonnes

Inventory Price Price Q avg

Market situation – summary

Metal demand ‒ China slowing ‒ Europe hit by general lackluster

macro development Metal supply

‒ Copper output increasing but continue to face challenges

‒ Zinc supply in surplus Volatility remains

Concentrate market

YoY % Q1-12 Q2-12 Q3-12

Zinc

Supply 7,7 7,3 2,2

Demand -1,7 -3,6 -3,7

Copper

Supply -1,6 2,2 4,9

Demand -0,1 0,4 2,3

Lead

Supply 12,2 5,5 3,4

Demand 2,9 5,9 6,4

2012-10-25 Boliden Group Q3 2012 13

Source: © CRU Sep 2012 (www.crugroup.com)

Mines

2012-10-25 14 Boliden Group Q3 2012

Mines – Summary

EBIT 842 (1,047) MSEK ‒ 726 MSEK in Q2 2012 ‒ Write-down in Tara, -79 MSEK

Lower average prices ‒ End-of-period price effect positive

Easing cost pressure CAPEX 701 (505) MSEK

‒ 753 MSEK in Q2

Projects on plan

2012-10-25 Boliden Group Q3 2012 15

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

0

200

400

600

800

1 000

1 200

1 400

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2009 2010 2011 2012

Msek

Quarterly EBIT

Rolling 4Q EBIT

Mines – Production

Aitik at 36 mtonnes pace (35 mt on R4Q) High recovery in Aitik High copper production in Boliden Area

Garpenberg mining in low zinc grade areas Low grades in Boliden Area and high in Tara Low zinc production in Boliden Area

2012-10-25 Boliden Group Q3 2012 16

0

20

40

60

80

100

0,0

0,3

0,6

0,9

1,2

1,5

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2010 2011 2012

Metal content, ktonnes

Milled ore, mtonnes

Zinc

Milled ore Zinc metal content

0

4

8

12

16

20

24

0

2

4

6

8

10

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2010 2011 2012

Metal content, ktonnes

Milled ore, mtonnes

Copper

Milled ore (Aitik) Metal content

Smelters

2012-10-25 17 Boliden Group Q3 2012

Smelters – Summary

EBIT excl. PIR* 292 (356) MSEK ‒ 240 MSEK in Q2 2012

Positive TC impact Lower costs Maintenance stops

‒ EBIT effect 40 (45) MSEK CAPEX 172 (458) MSEK

‒ 274 MSEK in Q2

Kokkola silver recovery project on plan

2012-10-25 Boliden Group Q3 2012 18

-200

0

200

400

600

800

1 000

1 200

1 400

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2009 2010 2011 2012

Msek

Quarterly EBIT

Quarterly EBIT excl PIR*

Smelters – Production

Slightly lower copper production Lead feed up and electronics down

Stable production

2012-10-25 19 Boliden Group Q3 2012

0

20

40

60

80

100

0

50

100

150

200

250

300

350

400

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2010 2011 2012

Cathode production,

ktonnes

Total feed, ktonnes Copper

Copper feed, total Cathode production

0

20

40

60

80

100

120

140

0

50

100

150

200

250

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2010 2011 2012

Metal production,

ktonnes

Total feed, ktonnes

Zinc

Zinc feed, total Zinc metal production

Financials

2012-10-25 20 Boliden Group Q3 2012

Financial development – Summary

MSEK Q3 2012 Q3 2011 Q2 2012 Revenues 9,123 10,553 10,363 EBITDA 1,760 1,672 1,315 EBIT 1,146 1,180 769 EBIT ex PIR 974 1,397 931 Capital expenditures 874 965 1,029 Free cashflow 310 820 79

Earnings per share, SEK 2.99 3.06 1.89 Net debt / equity ratio, % 26 27 29

2012-10-25 21 Boliden Group Q3 2012

EBIT analysis Q3 vs Q2

MSEK Q3 2012 Q2 2012 EBIT 1 146 769

Process inventory revaluation (PIR) 172 -162

EBIT excl. PIR 974 931

Deviation 44

Specification of deviation

Volume -113

Prices and Terms (incl. hedges) 268

Currency effects -178

Costs 327

Depreciation -71

Internal profit elimination -152

Others -36

Deviation 44

Result for respective period

Realized Metal- and Currency hedge 93 58

Lower mined volumes and copper feed

Cost control and easing cost pressure Maintenance stops Q2

Price improvements end of period TC improved

2012-10-25 22 Boliden Group Q3 2012

High inventories of internal concentrate

Correction in Tara, -79 MSEK

EBIT analysis Q3 vs Q3

MSEK Q3 2012 Q3 2011 EBIT 1 146 1,180

Process inventory revaluation (PIR) 172 -216

EBIT excl. PIR 974 1,397

Deviation -422

Specification of deviation

Volume 126

Prices and Terms (incl. hedges) -250

Currency effects 46

Costs -25

Depreciation -130

Internal profit elimination -158

Others -32

Deviation -422

Result for respective period

Realized Metal- and Currency hedge 93 43

2012-10-25 23 Boliden Group Q3 2012

Copper volumes

Correction in Tara, -79 MSEK

Lower prices and terms except copper TC

Capital structure

SEK billion 30 Sep 2012

30 Sep 2011

Total assets 38,0 37.0

Capital employed 30.5 29.7

Shareholders equity 21.9 20.4

Net debt 5.7 5.6

Net debt /equity ratio, % 26 27

Equity/assets ratio, % 58 55

Loan duration, years 3.7 3.4

Average loan interest, % 3.23 3.05

Interest duration, years 0.8 1.1

Net payment capacity 9.2 9.6

2012-10-25 24 Boliden Group Q3 2012

0

10

20

30

40

50

60

0

2 000

4 000

6 000

8 000

10 000

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2009 2010 2011 2012

% MSEK

Net debt Gearing

Net debt & Gearing

Project update

Kankberg ‒ Mine production started ‒ Some gold processed ‒ Tellurium leaching start end of year

Garpenberg ‒ Underground infrastructure, shafts,

concentrator ‒ Start-up mid 2014, full production end

2015

Rönnskär E-recycling ‒ New furnace on full capacity

Silver recovery Kokkola Laver drilling completed Aitik feasability under way

2012-10-25 25 Boliden Group Q3 2012

Conclusion

Market uncertainty Stable operations Easing cost pressure Boliden area mix change

‒ Maurliden East depleting, copper ‒ Kankberg mine started, gold

Garpenberg in low grade areas

2012-10-25 Boliden Group Q3 2012 26

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.

Boliden Group Q3 2012 2012-10-25 27

Revisioner

2012 28

Under 2011 gjordes två revisioner en av dom I Indien.

Bilden visar en medarbetare från AVA Chemicals i Indien samtala med revisorn Camilla Ottosson. Till vänster i bilden syns den indiske tolken.

Metals for modern life

Cash flow

MSEK Q3 2012 Q3 2011 Q2 2012 EBITDA* (Operating profit before depr.) 1,760 1,672 1,315

PIR -172 216 162

Change inventories -579 591 -465

Change payables 274 -516 248

Change receivables -2 -79 205

Other 5 5 -5

Change in working capital -475 217 145 CAPEX -843 -968 -1,027

Financial items -41 -50 -55

Tax paid -255 -70 -310

Other 164 18 10

Free cash flow 310 820 79

* Includes PIR=Process Inventory Revaluation

2012-10-25 29 Boliden Group Q3 2012