2016 earnings call. My name is Sophie Arnius, and I'm Head of Investor Relations here at Boliden. Our CEO and President, Lennart Evrell, will run audience here in Stockholm as well as via the telephone conference. Lennart, please.
We are very pleased with the results. Again, it's a result of the strategic positioning with mines and smelters. For copper, it's difficult for nickel. zinc has been improving quite a bit. If there is a very good position, it is to be in mines and smelters. At this time, for SEK 1.3 billion, not including the process inventory revaluation, which is up from SEK 1 billion the year before, we are very pleased with that level. It has been a result of improved market terms, not so much on currency this time, but more on metal prices. The mines have excelled in several areas, I think it is impressive given that I think some disturbances in the zinc smelters, we had maintenance shutdowns in Q3 as well as the previous Q3, it's minor compared to the previous quarter.
The cash flow was not very good, it's due to sort of variations, which are of a quite normal nature. We're saying slow demand growth, you should probably more look at growth than slow because many commodities are seeing a negative growth in the globe's opening mines and the impact on copper, where the big wave of investments that resulted in new mines a few years ago and continues to increase the supply, continued risk for copper price. The nickel side is very depressed, even though we have seen some recovery from extremely low level zinc here. Next slide will be copper, you can compare the flat period over most of this diagram for zinc, then a decline, then a quick recovery up to the reasonable levels we have seen for some years.
If we compare that with the copper, we can see a long decline instead of those of you who are studying very long term or very old traditional patterns see that zinc and copper are sort of moving very few new zinc mines having been built. nickel. I read sometimes, "Well, wow, it's a very strong recovery for nickel price." Yeah, that's true. You can see it there on the very bottom down there is a nice recovery. I tell you, it's very shaded area behind which are going down. Fact of the matter is, demand for nickel is quite strong. Supply for nickel is quite weak, there is a huge inventory having been built up over the past years.
This is a somewhat busy slide, but what it's showing is the lines are showing the cost level, the cash cost average for the industry, or cash cost for the industry. 90 at a profit on the yellow line. On the red line to the bottom, it's half are going with EBITDA loss and half with EBITDA profit. The vertical lines are showing the up, the highest price, the lowest price for the different years, and the average with a triangle. As we can see, now we are at SEK 2,300 or SEK 22, SEK 23. On low levels. No doubt, we can see lower copper prices on very short times. As an average, it's very depressed price in copper. In nickel, well, it speaks for itself. I say below SEK 10,000 are impossible levels for nickel, and we were there.
We paid actually Kevitsa a day when the nickel was SEK 8,500. Not a good night's sleep, but we are above SEK 10,000, which is a miserable level, but better than that. gold and silver have developed well. Portfolio development, the currency positions on the darker blue on the left diagram. We have the-- sorry, on the lighter currencies on the darker side and the metal prices on the light blue line. We can see, we have had a quite stable currency situation for some time, and the later, what we say now, improved terms are coming basically from metal prices. I would like also to say something here. We had a board meeting yesterday, and as I do time to time, I show a diagram with all the nations had supplying copper. We are right on the middle.
We have a favorable currency development, which is not changing our competitive position. It's exactly or almost exactly, it's said above or better than the average for the copper industry. In zinc, we are better than the average because a lot of zinc is coming from China, and China is linked to the US dollar. There we are slightly better than the global average. In nickel, it's also there we are in Finland with Kevitsa, and we are also there right in the middle of the total of the two is the yellow line here, the weighted average of currencies and terms to the right, good development. In mines, earnings SEK 800 million and a little more compared to SEK 260 a year ago, and we had SEK 600 in Q2. What is encouraging here, I'd say this, Garpenberg is continuing to excel.
It's a phenomenal investment to do zinc and silver with this timing, and the mine is really a good mine regardless. It's an almost perfect project at a good timing. We have some other good news, and I would put my finger on Kevitsa, which is doing a good profit at this miserable time for nickel. Now it's a slightly light or soft ore, which is processed quite easily compared to the average in the mine. There are a couple of good things with the period. I think all in all, you see a very encouraging development. The other one is Tara, where we have had a good development over the past several quarters with a year or two years ago, we reduced manning. We had difficulties to hold up the volumes, but now we have a good development right now.
If we look at the mill throughput on the bars and the metal content on the lines, we have in the copper we have with and without or pro forma, the lighter colored top line there. As we can see, the throughput is probably nothing to write home about. In copper, it's a normal kind of throughput, but grades are improving, and mix is improving. The average grade is improving. The content of metal is increasing, both pro forma and as reported. In zinc is a bit the difference. We have slightly lower grades but very good throughput. Therefore, the bar is high and the metal content is the best quarter ever for Kevitsa. I think the team in Kevitsa have been welcomed in integration teams. I think the cooperation is going well, and basically, we are feeling good about the situation here.
In smelters, I would say the quarter has been not so special. It's not bad. CapEx was SEK 280 in line with or slightly lower than last year. We had improved market terms with the zinc TC following the zinc price up because we have the zinc escalators. We had some disturbances in Kokkola and in Odda and at all. It's not good, it's not bad, but if anything, it's a little bit on the low side. We have high inventories, and that is due to a lot of the mines have been producing very well. We have some disruptions in the smelters, and obviously, the inventories are piling up, which has to put in the plants. Not so much to say about this. I think the positive note is Odda P200. Let's dive into the financials straight ahead with the financial summary on the first slide.
I'm sure you've seen in the report that we have an EBIT excluding process inventory revaluations of SEK 1.3 billion, which is a number that we're happy with, and I think you have to go back a few years to find a similar level in a quarter. That is roughly SEK 250 million better than Q3 of last year, and it's just about SEK 400 million better than the previous quarter, Q2. You also know that we acquired Kevitsa. I will come back to that a bit more when we talk about the EBIT bridges. I also want to highlight that process inventory valuation was positive in the month or in the quarter, leading up to EBIT of just above SEK 1.5 billion. Investments, capital expenditure was just over SEK 1 billion, and free cash flow was low at SEK 91 million, as Lennart mentioned.
I'll come back to that as well. If we then move on to the analysis of the changes in EBIT between the quarters, and then starting by comparing Q3 this quarter with Q2. This primarily improved zinc prices of roughly half a billion SEK. Volumes were positive, SEK 164 million up. Behind that, there is a slightly mixed picture. As Lennart mentioned, there are some nice good performance in mines with higher mill volumes in most of the mines. Some production disturbances in smelters that has a negative impact also with lower free metals. Costs were up compared to last year. In mines, it's volume related. In smelters, it's partially related to the production because they have been moving up and down a bit. Looking at the depreciation for Kevitsa, it's SEK 139 million in the quarter.
For modeling and so on, that's a level I would use going forward. Comparing this quarter with Q2, the previous quarter, again, pro forma with Kevitsa fully included in both, we have a positive deviation of SEK 433 million. Volumes are negative. We had less favorable ore mix in the Boliden area, which we guided for in the previous quarter. Due to the stockpiling up that Lennart mentioned, largely zinc. Costs were lower, almost SEK 300 million compared to the previous quarter. There is a seasonality in this. During the later part of the summer, we do have lower cost typically. We also had less maintenance in smelters in the third quarter compared to the second quarter. Finally, I think you might remember that we had some positive one-offs last quarter as well with pensions in Tara.
Putting that back, it adds up to a positive improvement of just over SEK 400 million. Free cash flow is at a fairly low level of SEK 91 million. On this slide you immediately see where the cash is tied up, in working capital, with just over SEK 1.1 billion tied up during the quarter. A third of that roughly is price, and the rest is volume related. As you see also, it's primarily inventories. Well, we've had a very good production of the volatile situation in Aitik, where we built some safety stock in Rönnskär to guarantee good processes at that smelter. On top of that, there is some normal fluctuations that we see in every quarter. If we ended Q2 with inventory levels that were below average, we are now above average.
That leads to a balance sheet looking like this, with a gearing improving from 43% to 4% stable as well with 1.2%. With that, I hand over to Lennart for some concluding remarks.
I sometimes talk about quality of earnings. I think sometimes you get a result which is somewhat odd. You probably land where you should, but in a somewhat unexpected way. I think the quality of earnings are great right now. I think the investments we have done is paying. I think the problems we talk about are well communicated before. I think that basically we have very few surprises. When I say this, touch wood, but I think that we are in a stable situation. We have instability where we know we have instability. We have stability in most of the places as we should. I think if we conclude and see where is this company going, first of all, we are in this strategic positioning with mines and smelters, base metals, and precious.
I think we have invested now in slightly broader precious metals into the group as a result of Kevitsa, but also the strategy in smelters with more complex materials. We are sort of dividing our portfolio over time slightly wider. Right now is a good place to be in copper smelting. It's a good place to be in zinc mining. Another time it's the other way around. I think that is our strength. We have not been going down as much as the industry in general. This is very much the strategy of this company. We try to be less volatile than the industry as a whole. Good for zinc. It's risky for copper still. I think for TCs, it's looking good for copper. It's going to probably be a good place to be also in zinc smelting. Aitik has volatile production.
As you know, we have three places, three positions of crushing in this huge pit. When something is down for repair or maintenance, we have to go to where the stations are open. We try to blast so we have ore available in several positions. With an uncertainty of which crusher we will have to go to, we will pick ore from different places. We don't necessarily plan that in advance. It means that the volume deeper in the pit, therefore we are guiding for better grades going forward. That's about Aitik. Garpenberg, some people are asking, are we going to get better? This is an unbelievable work. Garpenberg is delivering very strong results. The good things here in apart from those which are well known from before, so no news on the two big ones are of course Kevitsa and Tara.
Tara has been on a break-even kind of situation. Tara is doing a good result now. Higher production volume, better prices. Kevitsa, I think the average in the market for the expectation is, well, hope they are not making a loss kind of in sections where the ore is softer than the average. Still, it's a good development. In smelters, we had a period of very big shutdowns. The quarter-to-quarter is having a big impact of that. We continue to have some disturbances in Kokkola. We also there, we have been talking about this before. We installed some new equipment with certain advantages or with a number of negative impact. Odda, as I said, we are well ahead of plan for the ramping up or for the startup of the P200. We actually did some test runs already in Q3.
It's going to be exciting to see Q4, Q1, Q2 how it's going, but we are ahead of plan. On the CapEx guiding, as we have said before, we are putting in more money in the smelters. We earn a lot of money in the smelters. It's more rewarding or is better returns to maintain and keep high productivity and high availability in the smelters when we earn a lot of money than during the times when profits were low. The guiding for next year is SEK 5 billion, where among other things, the big crusher project in Aitik will take most of the capital payouts. I think with that, Sophie, are you taking over with the Q&A?
Yes. Thank you, Lennart and Håkan. We will now open up for questions.
Olof Grenmark, ABG Sundal Collier. Congratulations on a strong result. Regarding Kevitsa, you said that depreciation was unusual in the quarter, but you didn't really explain why. Is the new depreciation level that you're guiding for a reflection of the CapEx?
What we said is that looking back at the pro forma periods before it was acquired by us, we can just see that the depreciation levels have moved a bit between the quarters. Looking at full year figures at that time, current stripping and the current investments. I should plan for this level going forward.
You also said that the softer ore had a positive effect in that mining during the quarter as well as in Aitik. Is it possible to quantify somehow in terms of cost per ton or so?
We have owned it for four months, no, we have no chance to. No, I don't want to comment on it. It is only that, as you see, it's all-time high. It is going very well, and we know that part of the explanation for it is softer ore than the average in the mine.
What kind of CapEx do you expect to put into CapEx into Kevitsa to get it up to your standard?
We are going to inform sometime. I think we are going to do it together with the Q4. It's well invested. It's not going to be a lot. The big investment is in the push backs. The geometry of this mine is giving a lot of stripping in the first five, 10 years. It will ease a little bit as the years are going on, that's a big number, and that's a big item.
Thanks.
Ola Södermark, Swedbank, prices and currency.
Given the present prices is absolutely important, so no one is misunderstanding what I am going to say now. The nickel price is impossible to predict. I think it has a limited downside and a better upside, obviously, but that remains to be seen. I think that we are a bit on a better than normal everything equal. We hope to improve certain things. Of course, over time, we hope to see bigger production, but more on that after Q4. The soft ore was a contributing factor which you cannot plan to continue.
I have to ask about Aitik as well. 9 million tons in throughput. It is on the low side of your guidance. What should we expect in coming quarters?
I said it cannot be below nine or so. That is the worst case scenario. We are doing it for. When the visibility is low, the visibility is low. I think this is probably a level which you can probably count on.
Okay. Thank you.
Hello, it's Johannes Grunselius here at Handelsbanken. My first question is on Aitik and your guidance reiteration, 0.21 for this year is only one quarter left for the year. Should we be thinking like 0.19, 0.20 in terms of copper grade in the fourth quarter, or can you help me there, please?
There we have to be-
0.21 for this year.
Okay.
Then we said 0.25, 2017 to 2019.
Right.
We have also said volatility on-
Yes
this number. It's a hard one to-
Again, since you have nine months as an actual-
Yeah
grade. Somewhere this lower period that adds up to this year's guidance is there somewhere. It's going to be mined. Is that going to take something from the 0.25? We have a volatility between the quarters here.
I have a question on the disturbances in the zinc smelters in the quarter. Is it possible to get a number on the impact of those?
Of what?
Of the production disturbances like in Odda and Kokkola. You weren't completely happy with it appears. At least you're mentioning it in the report, it must be a negative effect of it compared to budgets.
Yes. Probably yourself have modeled something slightly higher, and you should probably have done that. Your models, your analysis as an average are probably right. We have under-delivered a bit on this. Not a big way, but some.
My final question is on Odda P200. How should we be thinking about that for first quarter next year, et cetera? How much could we expect the positive impact to be from this?
We have been through many quarters where we are some years before we start up major projects, and we're always saying on the 1st of June or something like that, we start. We're standing because the start-up is always a period of start, stop, adjusting. When you are in it, we started the test runs. We will continue with the test runs if everything goes fine. We're going to be a lot before plan, but that's not what we're telling. We're saying that we are ahead of plan and it's looking good. In the second half of next year, it's definitely going to be producing, probably before.
Thank you. Do we have any more questions from Hjalmar?
It's a fairly small number.
Okay.
Yes.
Then you mentioned on Aitik the higher grades that you're going deeper in the pit. Is that any effect on the costs looking into 2017, 2019, or is it kind of flattish on that?
No.
On Kylylahti, you have gradually increased the production in the last few quarters. Is the 200,000 tons levels sustainable, or is this one-off this quarter?
Kylylahti, the big news there is the update of the reserves. With the present reserves, as you know, it's short life of mine, and we are going to come to an end of this mine unless we find.
Okay. Operator, do we have any questions from our audience via the telephone conference?
Yeah, ladies and gentlemen, if you have a question, please press 01 on your telephone keypad and you'll enter a queue. We have the first question from the line of Alain Gabriel from Morgan Stanley. Please go ahead. Your line is now-
Those disruptions during the quarter, would you be comfortable in saying that they are now far behind us? The second question is on your zinc exposure. Given where zinc prices are at the moment, it's surprising most people to the upside. What options do you have within your portfolio to just capitalize on those higher zinc prices in terms of expansions, life of mine extensions, or life of mine changes? Thank you.
The first question on disruptions, we installed some leaching equipment in Kokkola some year and a half ago, we have had certain disruptions, difficulties with the silver recovery and this hot acid leaching equipment. It's not a major thing. It's not a major thing, and I really want to stress that this is not a big thing, but hadn't we had that, it would have been probably a very good Up, what could we do about that? Well, have a look at what we already did. It's a super thing. We invested in Garpenberg. We have better production than for a long time in Tara. We have P-200 with zinc escalators in the smelting coming. We're doing everything to be on this wave of a positive macro on zinc. Could we extend the life of Tara?
That is a big question, and I would say probably not because we have a tailings dam, which is full, Fail a little bit higher and do a little bit more and find whatever we can. I have no news on this one. Of course, Tara's life of mine is coming towards its end.
Thank you very much.
I would say, of course, the answer to your question lies in the big investments we have already been through or in the case of P-200, is ahead of us. The rest is really the reserve and resource update after Q4.
Understood. Thanks.
The next question comes from the line of Philippe Nergenti from ABN AMRO. Please go ahead.
My first one is on Garpenberg. I was wondering, you were guiding for the silver grade to be at 120 grams per ton until the end of 2016. I was wondering if you could give also some, maybe if you're willing to give some guidance on how it will look in 2017. Will it be largely in line with the average reserve grades? Then on Kevitsa Boliden area, you already touched upon the soft ore. Is that something that we'll still see in Q4?
Okay. Silver in Garpenberg, you have the guidance there, right?
Yes. It's 120 grams per ton until 2017. It includes also 2017. Zinc is 4.5, we have said.
Okay.
I can also perhaps answer with Tara also the great question there. Well, we have said the zinc rate, we plan for that to be lower than what we have now had in Q3, and that was 6.0%. Something a bit lower than that.
Okay.
On soft ore, we are in a period in Boliden area, we have one concentrator where we get feed from four different mines. One of them is Which are under mine and high grade. The mix here means that when we do Malmliden, the open pit, we get a lot of throughput, but not so much metal. When we reduce in Malmliden, the throughput goes down because it's harder ore, but we produce more metal. That's why Boliden is not so easy to estimate for you. We have said before, well, the good news, it's a very small area, so it doesn't impact that much. Well, today it is impacting quite a bit because we are making a lot of good results there.
This is a situation behind the guidance on when we talk about Boliden sort of soft ore, it means more of the open pit-
Sorry. I didn't hear the question. Could you repeat that?
That will be something that we're still seeing Q4 as well, the lower grade, but easier to mill ore, and that we'll see in Q4 as well, and possibly the start of 2017?
I would say for the Boliden area, that was for Q3, you can say more or less isolated. That was due to us having a more extensive maintenance shutdown in Renström, and then also then replacing Renström ore with Malmliden ore.
It will be normalized in Q4.
Yeah.
Okay. Thanks
The next question comes from the line of Frank Ngannou from Deutsche Bank. Please go ahead, your line is now open.
Morning, gents. Morning, Sophie. Thanks for taking my questions. Three for me, please. The first one is on the premium market. I've seen you have a negative contribution of the premiums, what's your sort of outlook for the rest of the year as we go into 2017 on the premium side? The second question is on working capital. I suppose the big negative impact mainly came from inventories, how should we think about the working capital cycle as we move on into Q4 and the first quarter of the year? Do you expect any receivable or payable collections that could help to get back to normalized levels? Just another follow-up on Kevitsa, the soft ore, do you expect it to last longer into Q4 as well?
On premium, I would say that spot premiums are in line with the macro description we have. It's low premiums in copper, it's better in zinc, which is probably an indication of the price sentiment. It's also a lot of seasonality and summer shutdowns and inventory movements in the market and so on, in smaller, in the European markets and so on. Hard to say, that's the general picture. Then it was a balance sheet thing, right?
Exactly. On the working capital, as I said, we are clearly above average levels in inventory, we have fairly big fluctuations between quarters, over time, we should work our way down.
When it comes to the soft ore in Kevitsa, when I'm saying that we have soft ore, looking forward, be careful, we had soft ore, it means that it's probably not going to continue in exactly the same-
Please go ahead. Your line is now open.
Yes. Good day, gentlemen. First off, just following up on this inventory or working capital question, with the inventory being the main driver now during this quarter. To what extent is this sort of an isolated situation for this quarter, and to what extent is it more structural relating to the unstable production at Aitik?
For a change, I take the balance sheet question. Can I?
Yeah, please go ahead.
The answer is short.
I'm fairly soon then. Second question is on Aitik, and you have your guidance there for higher grades starting in 2017 and then going on until 2019. How steep, and how clear cut should we expect the move into higher grade areas to be?
We're funny people because we're trying to keep it as stable as possible, but it doesn't seem to be stable. With the mine plan we have, we're going into the higher grades, and hence we are going to have several years of high grades. Once we have depleted the lower parts of the pit, we're going to start up again or higher up with lower grades. That is a pattern we have, and any more detailed guidance we haven't given. We don't intend to give either because of the volatilities we have been talking about.
All right. Finally, also on Aitik, if you could perhaps elaborate a little bit more on the crusher situation and especially the investment, because I understand you're going to be making the investment next year, and then we should expect them to be up and running 2018. Is that correct?
The bulk of it, right now, if you go up to Aitik, there is a huge construction, huge building project. I think right now, the concrete is going up, so the walls and the fundaments of the big machinery is going to be done pretty much before the winter comes. We will have some ceiling, and we can start continuing to work for the mechanical installations. The mechanical installations, the bulk of it will be delivered next year, and the bulk of the payments will be sort of with the investments or with the deliveries and sort of installation on site. We have a long period of installing all the piping and electricity and everything else. We have sort of a ramping up, and mid of 2018, we're going to be in production.
All right. Thank you very much. Those were my questions.
The next question comes from the line of Jason Fairclough from Bank of America Merrill Lynch. Please go ahead. Your line is now open.
Good morning. Lennart, I've got two questions for you, let me just do one at a time. The first one, this hockey team you support, Kalix UHC, I understand they're running ninth right now in the Swedish League. I'm just wondering, do you think you should be switching your sponsorship to Malmö next year?
Our strategy is to be sort of diversified, to gate or to hedge a bit our total consolidated result, including sports. We are not going to change our sponsorship. It's a great team.
Okay. All right. That's good to hear. The other question for you is on M&A. I'm just wondering, do you have to wait to bed down Kevitsa before you can think about more M&A, and in particular-
I think that we are prudent in taking on a lot of acquisitions. We bought Kylylahti two years ago. We bought Kevitsa now, or a year ago, and a little, and now we bought Kevitsa. I don't think you plan this way. I think you should more say that Boliden, they are the kind of people, they're not buying when the metal prices are high. We have also said, which is the most important, we have a capacity in the financing or a financial capacity and a people capacity. We are pretty busy now with Kevitsa. We are pretty busy with all the other projects, and I think that we are not exactly driving the acquisition track very hard, but we are there. We are active. We are keeping our eyes on everything that would be of interest for us. I don't comment on any specifics.
Okay. Thank you very much.
Sorry, hang on.
The next question comes from the line of Fraser Jamieson from JP Morgan. Please go ahead. Your line is now open.
Hi. Thanks for taking the questions. Follows a ton, so a very big discrepancy relative to the benchmark rates this year. I was just wondering if you can maybe give us some context around your conversations with customers, et cetera, and how you're thinking about the benchmark rate. Just wondering to what extent you have been able to start moving material through your own internal smelters and to what extent the performance of the Kevitsa material through Harjavalta has surprised you either positively or negatively. We've obviously talked about the mining side having been a bit better than expected. Just some context on the performance through the smelting side of the business would be great. Thanks.
On TC, I think that would I have very detailed information from our negotiations, I wouldn't tell. We are going into the negotiation systems with LME Week coming up, and I think zinc TC is very interesting. Is that an indication of pressure on it? In a way, yes, but I certainly don't believe that is or I don't think at all that is an indication of where they're going to land. I am actually quite convinced it's no way near. I think there might be an indication, and I said right in the beginning that there is some risk on the zinc TC. However, the price escalation will or escalators will continue. With a good price environment for zinc, I think the zinc sort of realized together with a price factor will be reasonable.
When it comes to Kevitsa and Harjavalta, as time goes on I don't have more information today than what we had before. We have about half of Kevitsa's feed going to Harjavalta today, or the copper is also going to Rönnskär or to a combine. That will over time go up to 100% and it's going to take a couple of years before we're there. When it comes to the processing, no, there are no news on that.
Okay. Thank you.
The next question comes from the line of Robert Redin from Carnegie. Please go ahead. Your line is now open.
Hi, Robert Redin from Carnegie. I just have one question on Aitik. The guidance is now for 0.25% grade for 2017 to 2019. That's of course in line with what you said before, it's more precise, right? I think before you said that the grade would be above the average of 0.23%. My question is, are you more confident on the grade and grade development now versus before or has anything changed sort of positive or negative or is it just a way for you to be more precise?
I think that we have a very good control of the grades in the pit. What is happening is, of course, every year you have the long-term sort of mine plan where you are going to mine at each time. This picture has changed because of the volatilities or the low availability of equipment we spoke about. Of course, when we have mined out something, we of course are slightly more precise when we're coming closer to the period of mining. I think there are no newly the averages over time, and the individual quarters will move around quite a bit, I'm afraid.
Okay, thanks.
The next question comes from the line of Christian Kopfer from Nordea. Please go ahead. Your line is now open.
All right. Thanks, operator. Good morning, everyone. First, just a quick follow-up on Aitik again on the grade. You have previously said that the underlying, say, call it uncertainty of the grade is ±10% on Aitik. Is that still relevant for the following three years?
It's probably higher, if I would say anything. If you talk about the short-term volatilities, if it is on a yearly level, I think that's fine. On a quarter by quarter, it's probably higher. I'm just taking it from the top of my head, but I would think so.
Okay. If you're talking the three-year period as such, if you look in that context, is there-
I think that's fine. If you do your NPVs and some of the valuation or the value there, at present value, I think absolutely. That's fine.
All right. On Garpenberg, you have been producing above the nameplate capacity for a couple of quarters now. Does that mean that you expect the mill volumes in Garpenberg to come down during the next couple of quarters?
We have. Who knows? I mean, the more quarters we're delivering, the better it becomes. The guidance has not changed.
You guide for 2.5 million tonnes for 2017 now?
Yep, absolutely.
Right.
Okay. Finally, for Q3, so I understand this correctly, were there any one-off items in Q3?
No, there were no material one-off items.
Earnings. It's no surprises there, basically.
All right. Okay. Thank you very much.
The next question comes from the line of Jatinder Goel from Citigroup. Please go ahead. Your line is now open.
Hi, good morning. Two questions, please. Firstly, just on concentrate availability on the zinc side and TC realization, able to procure material, especially at benchmark terms. Secondly, just on taxes. For the current year, there's about SEK 100 million underpayment, and there was over SEK 400 million underpayment in 2015 as well. Do you have more visibility on timeline into the fourth quarter and potentially into early 2017 as well when this cash payment is expected? Thank you.
Well, on the TCs, most of what we're doing is on benchmark. We have long-term or sort of industrial customers with yearly agreements or long-term agreements, which are sort of revised yearly. Therefore, the impact on the spot terms are limited. We always have a slight little tranche of open metal to the spot market. We have some impact on it, but it's not by a lot. Then the balance sheet questions.
Yeah, on taxes. On the income statement, we have firstly taxes relating to this year, and then we have deferred taxes. On the payments, there are preliminary payments and final payments. The only thing I can say is that over time it will even out.
Can they be below income statement level for the whole year?
They could be, but they will catch up over time.
Okay. Thank you.
As there are no further questions at this point, I'll hand the conference back to the speakers.
All right. Well, we're happy with what happens at a time with very exposed or very difficult nickel times. Far so good. Volatilities in nickel is huge. If we have a good time, it's going to be very nice. It seems like the inventories are very long or very big. I should probably finish by saying that the quarter was very good. We have some slightly big or positive surprises, some slightly negative surprises, but basically it's very normal, it's very typical, and the quality of earnings, it is what you see. With those words, thank you very much for attending, and thank you