Today's presenters are Anatav Rel and Mikael Staffas as usual and we'll wrap up with a Q and A session and be finished within the hour. Leonat please.
So good afternoon and welcome to this presentation of our Q3 results. I got a question from a journalist. What do you like the most with your report? And I said, well, probably that we don't have much of specific news. Everything is really moving on very well.
No big surprises on production. No big surprises on cost. I would say that we have had a smooth ride in the Q3 in general. If there is We had one good news with Harjavalta, which had some exceptional good results and Ronnskar with a lower than expected result. But those 2 are evening out.
So the copper smelters in total are okay. Looking at the general numbers for €8,500,000,000 in sales compared to 9.1 a year ago. Earnings before interest and tax and before the process inventory revaluation was 603 as compared to 988 a year ago and in 681 in the previous quarter. Compared to the Q2, we had smelters improving. We had mines on flat results.
The smelter improvement was of course due to the shutdowns in the quarter primarily. The cash flow was €436,000,000 compared to €310,000,000 a year ago. And that was of course influenced by the capital expenditures of €1,100,000,000 compared to just short of €1,000,000,000 the previous year. And we are on lower levels than we were in previous quarter. We are fading a bit on the Garpenberg project.
And in the Q2, we had all the maintenance jobs that we did. All the projects are continuing to be on plan. If we look at the market, I would say that you can go through the different diagrams and graphs here and what you see is very much well looking the same as our production. Not much to say about it. It's going sideways.
China is driving the markets regardless of what you're looking at. Behind China is the U. S. Economy, which is not continuing to improve, but it's still a growth in the economy and Europe flat on low or even negative levels. That is what you see on GDP growth.
That's what you see here on Industrial Growth. The yellow lines are the global total, which is the demand sort of number, which is important to follow. So we are in a flat general demand period. If we look at the 2 important sectors for base metals demand, it's construction number 1 and automotive the second. Here is automotive and you see the same pattern basically going sideways with the same China on top, Europe at the bottom.
If we look at the construction numbers, the same also there. We highlighted, however, the housing starts and the sentiment in the U. S. Construction market, which is clearly coming up on early indicators coming up very strong. And I'm not sure this is reflecting the latest development in the U.
S. Economy, but certainly we see an improvement here. But else on that very much the same as before. What does I summarize to? Well, the metal demand is China drives a metal demand as always and the global macro is reflected by the graphs I showed.
The metal and concentrate supply, the mine and smelter industry, Basically, we see after a period of lower results that CapEx spending are cut in most of the companies. We know that most of the mining companies have been dismissing their CEOs and there have been a lot of strategy talks management changes and so on. All of this hampering the level of CapEx and basically the headlines is that. The junior companies are having increasingly difficult to finance new projects same consequence or same driver as the first one. In copper, we have seen a general long term strong supply coming out, but which have been reduced by continued problems, mine strikes and disruptions.
Grasberg, Eskandila had strikes and the trend continues from before. Difficulties in the old big, big open pit mines compared to the forecast. However, we are seeing that the metal or the mine supply will increase over time. And we think that the copper or the copper TCs will enjoy this better supply situation. So it should be reasonably good to be a copper smelter going forward.
In zinc, basically the same demand pattern as copper. But here we see that there are several large mines, which will close in the couple next couple of years, Even if we are also going to see a couple of zinc mines coming to the market, we're starting production in near term. I have showed I cannot do it every quarter, but basically this global macro with new mines coming in and not so much in zinc and many large disappearing. And therefore, the output or the supply side is very weak in zinc and that remains the same. On TCs, it's the opposite.
Even if short term we're seeing TCs developing relatively well, I think there is a risk that TCs will have a less favorable development going forward.
If we
look at the zinc price, I mean, how fun is it to comment all of this? They are looking like the GDP growth and all the other graphs. Everything is going relatively flat and everybody 50% believes it's going up and some believe it's going down. But the fact of the matter is that we are going very much on a stable level where we are. This is zinc.
Well, I should comment of course on the inventory levels here that we are seeing after the long period of increase in official inventories that they are trading downwards since the beginning of this year. TCs, I mentioned already this in zinc. We are having the benchmark levels are going down. The spot is going up contradictory you can say, but it is below the benchmark level. So it's closing the gap between the long term and the spot terms.
Premiums are developing favorably. In copper, we see more of a negative trend also that in consequence to the macro description I gave. But over the past few quarters also here very flat. Inventories in copper are also going down. TCs are going up, a slight trend upwards and we see the spot terms coming up very strong from the early 2012.
Premiums have the same pattern as the zinc in zinc. Precious metals, gold and silver are very important for us and they are going clearly negative even though if you go up the last two quarters also here we see a relatively flat picture. But over more than a couple of years trends, it has been clear negative. Lead is looking is mirroring very much the whole story of zinc. We have enclosed the demand supply, mine supply, smelter supply numbers and balances for your information in the package.
I think I have mentioned or commented this already. If we go into our operations now, mines did SEK 372,000,000 which is way, way below of last year and it is basically impacted by the price and currency effects, but also that our hedge programs largely expired at the end of the first half year in the end of June. The production was very stable. We had a few surprises. If anything, of course, you have seen that Aitig was on good grades.
Also Garpenberg was operating good grades. Cost control, no surprises. I would say that we have kept mine and smelter inflation or cost increases on a very low level. And most of the changes are more a question or a matter of volume effect than inflation or the opposite. The CapEx was $947,000,000 continues to be high.
It was higher than last year of $798,000,000 and the expansion projects are on plan. The Gaipen Pay project, I will mention a little bit later. Brazil production numbers strong in copper, driven primarily by good mine output or ore production and with good grades. In zinc, we see good ore production and lower container metal and that is due to slightly lower grades in Tara. In Smelters, we saw basically a flat earnings before interest and tax and before the process inventory revaluation and a lot better than in the Q2.
We announced that we would have shutdown effects of €300,000,000 So that's exactly sort of making up the balance of nothing else on that basically you can say in one way. We had some maintenance stop also this quarter. We had 25 in the quarter and that was basically Baixe. We had a little work in Oda as well. We had 305 as I mentioned in the second quarter.
The sulfur rucasic market is lower or is weaker. We see lower price levels and we also see that the Nordic market is very soft. So therefore, we have to send the acid longer distances. And it's quite expensive to move the sulfuric acid in chemical tankers or special tanks and so on. So we are seeing a clear negative impact from the sulfuric acid.
The CapEx was €203,000,000 compared to €172,000,000 a year earlier. And also here the big project is a silver plant in Kokola and it's running on plan. The production looks good in copper and it was good. We came back from the big very unusually or uniquely large maintenance shutdown in the Q2 and we came back both with seed and with copper production. Ronsher being on the bad news and Harjavalta on the good news.
In sync, basically, it was a good quarter. And now, Erik, can you take over?
Thank you, Lanner. Just some brief comments on the numbers as well. The summary here, I'll come into most of these numbers as we move on to the further exhibits, but I'll just point out that 603,000,000 the profit after or before process inventory evaluation, you've seen that number before. There was a positive revaluation of inventory of 78,000,000 given a total EBITDA of 681 dollars You also see here the investment of $11.51 The investment continues to be on a high level just as we have said previously. We had a positive free cash flow of $436,000,000 If you start looking into the bridges on the EBIT side, if we start comparing to the Q2, this is a difficult quarter to compare with as we said before with the big maintenance stops in the last quarter.
So we have a positive volume effect of 56. There is a larger than that positive effect from the fact that we don't have maintenance stops. On the other hand, we always have a negative volume effect comparing Q2 and Q3 because we do take vacation periods in Q3 especially in some of the mines, but the net effect was a positive 56%. Prices and terms minus 4% that's another number very close to 0, which actually has 2 pretty big numbers involved in it. And you have positive prices in terms as such between these two quarters as the prices were actually moving positive.
On the other hand, as you all very well know, we have expired the hedge program that we had connected with the Garpenberg investment at the end of June. And therefore, we have a negative hedge effect. And these two numbers basically cancel each other out and you get a number of minus 4. Currency effects minus 58. The strong Swedish krona is continuing to hurt us.
Everybody could read that in the paper in the forum, but we'll just make the statement again. The cost situation much better than Q2, but once again this is related to the maintenance stops and therefore not really comparable. If you then rather look year on year and see what we did compared to year ago, the volume that we're presenting this quarter are very close to the volume that we had a year ago, very small effect. We do have a negative $400,000,000 in the prices and terms. This is both lower prices and terms and once again the difference of not having the hedges in place that we had a year ago.
We have a negative currency effect of minus 79 Those of you who've been in this business for a while know that these numbers tend to have opposite signs. They tend to be negative correlation, but we're now in a position where we actually have these 2 going both negative at the same time, which is a little bit unusual and it's worrying for us with a strong Swedish krona again. Costs minus 73,000,000 and they are I think also to you not worrying and I think to ourselves if we compare internal numbers and looking at the activities we're doing, we feel that we have a good cost control. Depreciation, once again two numbers that meet each other. We have higher depreciation because we're taking new equipment and new investments are putting into action.
At the same time, we had a write down last year in Q3 in Tara around SEK 70,000,000 and these two effects cancel out and you get a number that's very close to SEK6 1,000,000 Looking at the cash flow, we had a positive cash flow as I said before at 4.36%. The big number that points out here to you is the cash the tax line in the bottom. It shouldn't be a surprise. I think we were very clear a quarter ago that we were paying more tax in preliminary taxes than was the real tax burden. And we've now corrected that and we've gotten money back from the tax authorities as you can see with a positive cash flow of $283,000,000 on the tax pay line.
Apart from that, the investments of $1,152,000,000 we talked about before, these are also in line I think for what we haven't communicated beforehand. On the capital structure, not really much changed. When you have a positive cash flow close to $500,000,000 you typically reduce your debt with $500,000,000 and we've done that. When you have a profit of $500,000,000 you tend to increase your shareholders' equity by $500,000,000 and you can see that as well. We continue to enjoy a favorable position in terms of interest rate with 1.8% interest rate within the quarter.
The payment capacity is also sufficient. With that, I'll give it back to you, Lennart, to comment on our projects.
Thank you. Well, they are going well. First one is of course Aitik. We are on a good pace in the Q3 and we had a super second quarter. I think it is important to say that okay are you now already on the 36 pace and so on?
We clearly have and you have seen it, those of you following us carefully that the winter, the Q4 and Q1 are normally softer than the 2nd and third quarter. So what we are saying is that it feels as if this time we're probably slightly above the plan, but are very confident that we are going to make the 36,000,000 tonnes next year. And we had a very good couple of quarters now. The silver recovery project in Kokkola, it's really a concentrator plant. We are grinding some residues.
We are concentrated plant and it's a beautiful concentrated plant and it's a beautiful piece of engineering. It's coming together. And I think that we have a lot of technology how to operate that. We think we're going to make it on plan. And it's going according to cost as well.
It's going to be a good addition Kockola. It will be start up after the middle year 2014. Karpenberg is as you all know the big investment we're doing right now. We are in really, really critical time. Most of the deliveries are I should but all of the big deliveries are there.
We are putting them all together. We are starting or we are doing running all the pipe piping, all the electrical installations. And we are going to continue to do the installation of all the bits and pieces and controls and all of that and it will take another 6 months before you start operating it. We are on plan and we think we're going to do it on the cost or the CapEx budget. Tank tick 45 is moving on.
I think as we have said before with small investments in the concentrated plant we will be able to do this kind of or this production volume. What we are now looking at are the different life of mine plants. How shall we now define the ore body? How should we optimize the whole mine? It's starting to be very, very big as you know.
We have a lot of more lower grade areas. How shall we go about them? How shall we put this all together. We have some environmental what should we say the permitting. We are we have a permit coming up and we hope that will pass swiftly through 2025.
I mean, there are always 10 years at the time. But beyond 2025, we have some discussions going on how to do with the tailing dams, how to do with some of the emissions and some process equipment. And that is already coming into the life of mine plan when we start to ramp up or if we start to ramp up to 4 to 5,000,000 tonnes a year. So it's very long term the things we're going through right now, but they are also very important when it comes to how to do the detailed planning now. So it feels like Aitik has more long term planning than ever before.
And rather, we continue with a conceptual study. We have done some test milling as part of this feasibility or pre feasibility or not even the conceptual study. And we are going on as planned. And this is a longer term project and we continue to work on it. This is a graph showing where we have the ramp up periods and when we are into full production.
This is no news, but it's just another illustration of what you already know when it comes to timing which year is what coming in production. If we summarize and these are summaries of what we where we are right now, but with a focus on aspects which have a longer term or an impact on the business going forward. The market as we're seeing right now it is very, very much going sideways. It's all the lines regardless of what you're looking at is looking just like horizontal lines. What is growing continues to grow.
What is not growing continues not to grow and whatever else metal prices are remaining the same so far. We don't give any forecast and it would be awfully difficult to do so. When it comes to our own operations, Aitik is in low grades through 2014. We're looking at ITIC 45 and we are going to remodel that sometime whenever we are ready. And we are doing many iterations now to figure out exactly the best strategy to move forward.
But before we take any other decision, this is the guidance we give. Garpenberg is now on in lower grade positions than we were as an average in the Q3. But we are sitting now and mining lower grades than in the Q3. So I think based on that we should assume slightly lower grades in the Q4. Ground share stability remains an issue.
I got a question before how long is this going to take. And obviously, we don't know. We're working hard on it. And I think that it will take a while before we are through there. Same time, we have Harriamalte going opposite direction.
And I also think there that we are on temporarily higher than normal sort of performance. So hopefully, this will balance somehow each other. The hedges are expired after the first half of this year and we only have the gold hedges we took in connection with the Cancun investment. All of that is published in the report and you can read it, but be aware that you cannot just extrapolate to the previous year when we had a lot of hedges, which we took around the Garpenet projects. Those are expired by now.
And finally, we have a very interesting 2014 with 2 big investments starting production. So it's good we are in balance right now. We have a very, very exciting period ahead of us. Thank you. And I think that if I said something about the future be careful.
And with that we are prepared for your questions.
So let's open up for questions here in the room. And we have one there if you pick up the microphone please.
Yes. Ulla Sodermaiercer, Medbank. Some question about Carpenberg. You are guiding for lower grades at the mine. Is it just for Q4 or going to spill over in Q1 as well?
What we have been specific about is that Q4 is on a slightly lower level. But again, you know that we have said for a long time that we are working a lot down in the mine and we are mining areas around the expansion areas. And depending on what we do, we try to be flexible. However, that means it's also for us a bit hard to be too precise. What we are guiding for is Q4.
Okay.
And just timing wise with the expansion, when are
we going to see it in
the P and L? I know that is hard. Is it Q2 or Q3? Or I think you have said sometime that you are guided for 2,000,000 tonnes ore milled in 2014. Is this still the case?
We take Frans, you are the expert expert to answer what is normally our answer on that question.
Exactly what will happen in 2014. We have said 2,000,000 tons previously and we haven't ever changed that figure. So it's still out there.
Timing wise then Q1, Q2, Q3 in the P and L?
I think that the plan is to be in production in the first half year. And I think that in the Q2, we're going to start and exactly as with Aitik, you start with water, you continue with waste rock. We don't want to spoil any valuable ore. And then depending on how things are going, we start to process ore. I think there is a fair degree of flexibility there and it's an on off.
I'm always expressing it like this. When you start a project, you have a date to start production. And when you are 10 years away after start, you know exactly when you started. But when you're standing there, you have kind of 6 months, 9 months you don't know have we started or not. I mean it's a question of definition.
You don't even tell you cannot even tell when you're standing right in the middle of it because you're running a little. You have to stop. You have to rebuild. You have to trim. You have to do a lot of things.
But I think that in the end of Q2, we're going to be in strong production. Otherwise, we will not make the €2,000,000 So that's the guidance we give as of now. Thank you.
Operator, do we have any questions on the
We have a question from Mr. Thomas Zimmerman from HSBC.
I have a question on the smelting side, if I may. On compared to the Q2, the TCRC terms dropped by €51,000,000 And I just wonder how that is possible given that you have a much highest throughput. You had the maintenance in the previous quarter. So even if TCRCs on a cent per pound basis have declined on an absolute level, they should have gone up. So maybe you could give some explanation to that?
Hans, you are again the expert. On the I think it is a good question. It looks a bit odd.
It's 3 parts actually. 1 is the slag milled in Boliden. So it actually increases the mine's EBIT and decreases smelter EBIT. Then there is internal transfer between one part of the company and the other Boliden Commercial and our marketing organization and the smelter organization, which unfortunately sort of fogs the NTC RC line in the profit bridge. And the 3rd part is a revaluation component in the process stock that also ends up on that line.
So it looks a bit odd, but the underlying TC figure is positive. But it's sort of a one off in this quarter.
Thank you.
You.
We have a question from Mr. Alan Gabriel from Morgan Stanley. Please go ahead.
Yes. Hi. Good afternoon, gentlemen. Just a quick question on the working capital.
Do you
expect a reversal of the working capital in Q4? I believe it's fairly high relative to current commodity prices where we stand today. And my second question is on the CapEx providers. Are you seeing any more favorable pricing from your equipment providers? And should we expect any improvement in the terms that you're obtaining at the moment?
Thank you.
I'll take the working capital just very quickly. It's a true observation that we are relatively high on working capital given the present metal prices. Part of that or pretty large part of that is actually the problems in Rundshall where we're having process inventory and not just process inventory, but also other intermediate products which are higher than ever and that will come down in the same pace as we can sort out the production problems in Rungeb. So yes, it should revert, but I cannot say how quickly that will happen.
And on CapEx prices, we see all over the place that CapEx suppliers or equipment suppliers will have hard times. And I think it is more on volume so far than on price. I mean, obviously, it's easier to make a good deal now than it was 2 years ago. But it's stiffer than probably some would have anticipated. At the same time, I think we have Boliden, We're working much more professional on procurement and we are trying to bundle contracts and we are doing a lot of other things.
So I think we are coming out relatively strong. If that is a market phenomena or if it is our own work, I couldn't say. But it's definitely a better situation than used to have.
Okay. Thank you.
Our next question comes from Mr. Christian Kopfer from Nordea Markets. Please go
Okay. Thanks, operator. Just some two quick follow ups. Firstly, I think you mentioned that you see impact from lower sulfuric acid prices. Have you already seen some impact on earnings on that in the second quarter?
Or will it come continue to schedule in the following quarters?
We have it in the Q3 and it's quite a big component. And when I'm saying big, it's not one of the biggest. But if you look at it on the byproducts, the byproducts are clearly negative depending on compared to previous periods and sulfuric acid is playing a role. It is not something which is changing the group, but it's a fairly significant value hitting us negatively in the Q3.
So if the sulfur gas prices stay where they are, do you see will you see additional negative impact in the Q4 on this?
Well, I don't think so. I think that it's taking a time to things to filter through. If it stays where it is probably we would have additional slide because we are on the slide. So maybe a slight negative development still, but most of it I think is basically there.
Okay. That's fair.
I'm not 100% how that, but ballpark I think it is true.
Okay. Then on Aitik, I think you previously have talked about that the grade for the full year is around 0.20. I guess you were quite you hit quite high grades in the Q3. Will that mean that you will go into lower grades again in Q4 in Aitik?
Well, if you have if you're indicating a level and you're high for a time, you should be low at another time. So basically, yes, you're right. But I also would say that we are on small change first of all, we were aware that we were mining slightly higher grades than slightly higher than we indicated before. But it's also a natural variation. We don't have that accuracy in our own estimation.
So I think that we have a dual effect. We knew it was going to be a little better, but then it came a little better still. So I think be a little bit prudent, but I don't think we 0.2one quarter means 0.18 next. I don't think that's exactly what you should read into
it.
Operator, are you still there?
Yes. We have Christian Kopf's line open.
Yes. My questions have been answered. Okay.
I'm sorry. Our next question comes from Mr. Johannes Grusiotis, ABG. Please go ahead.
Hello, everyone. My question was just taken here. So I'm happy with that. But can you perhaps elaborate a bit on your thoughts on dividend here, Lennart? I know this is a question for the board, but should we read in that your dividend policy is 1 third of the EPS and this is sort of a mechanical policy or can you elaborate on that please?
Well, it's I'm not sure we should let's put it this way. We have phrased our policy more firm than most companies. So it's policy which we I think we will follow very, very strict unless we take some kind of a different stand or direction on it. I wouldn't say so. So for a guiding and for simulating, I think you should just plug it in.
Okay. Okay. Thank you very much.
Our next question comes from Mr. Nick Peas from Exane Paribas. Please go ahead.
Hi, gentlemen. Luc Peas from Exane P&P Paribas. One question, if I may, with regards to CapEx. Looking at the trend over the 1st 9 months, it seems that you're running slightly higher above the SEK4 1,000,000,000 you've been guiding so far. Should we therefore put into our model something closer to 4.5 or in between I guess?
Thank you.
Just to correct you there, we've been guiding that we're going to be between 4.5 and for 2013 closer to 5. So I think we're running quite exactly where we've been guiding and it's just been setting saying close to 5.
Okay. Thank
you. Our next question comes from Mr. Rob Clifford from Deutsche Bank. Please go ahead.
Yeah. Hi, gents. Two questions. One just on CapEx as well. Can you give us a bit of a steer on your maintenance CapEx where that's falling out the moment as a split of the total?
And secondly, then at risk of getting answer, it's all flat again. Can you comment a bit about what you're seeing in the scrap markets, the e scrap in particular, but also the others?
Yes. But what did you ask about maintenance? Was it maintenance CapEx?
Yes. The sustaining CapEx.
Yes. The sustaining CapEx. It hasn't really changed from before apart from I think we talked about this already a quarter back about the accounting rules and with IFRS twenty coming into account. The previous truth was somewhere just south of $2,000,000,000 has then become slightly north of €2,000,000,000 So we said sustaining CapEx is somewhere €2,000,000,000 to €2,500,000,000 not being more exact than that. That's our sustaining CapEx.
Right. Thanks.
On the scrap market with lower well with the economy in the world, which is lower than anticipated with expansions which have been going on by us and by others, I would say that the scrap market is balanced. What we are seeing however is that the quality of the electronics to be recycled is now lower quality than before. And we think that that is primarily due to a shortage of returns in the recycling the primary recycling where consumers are turning in their cell phones and computers. So we see a slightly negative material mix, but not necessarily a shortage of material. That's so it's a slight negative development as compared to what we have probably said before, a slight negative on quality.
So when you're talking about quality there, are you talking purely about contained metal? Or are you talking about deleterious elements or processing issues with the quality of the scrap?
We talk about 2 things. 1 is metal content, which is not the big concern. It's more that we have more impurities and more difficult materials coming with the electronics, which is sort of reducing the quality.
Okay. Great. Thanks for that.
Our next question comes from Mr. Amit Tansuri from Societe Generale.
Hi, this is Amit from Societe Generale. I have a question on exploration expenditure. If I understand correctly, the expenditure has been cut down in the Q3. So do you think you will be able to sustain this level of expenditure going forward? Or you would need to increase depending on metal price movement?
Thank you.
On CapEx, I'd say that first of all, we have the sustaining or maintenance CapEx as Michael commented on. And what else? I misunderstood your question. Was it on exploration?
Yes. Yes. On exploration expenditure, yes.
Okay. Sorry, sorry, sorry. I misunderstood your question. On exploration, we are reducing have a somewhat hesitant general market and lower metal prices. We have a somewhat hesitant general market and lower metal prices.
In that environment, price environment and earnings environment, we take it somewhat easy. And what we do is we reduce our drill programs short term. We work more with the drill data we have and work with the modeling, which is a normal very nice flexibility we have, which is not over time reducing our sort of exploration potential, but it's a way to balance sort of the cash flows. We do that and we're continuing to do so for a time. And then the market situation and of course the result of our exploration will guide us whether we continue to grow the exploration spend or not.
So we are in a little bit of a careful situation without risking the long term potential and we can do that for at least several quarters before we need to sort of accelerate again or we take sort of a lower ambition on exploration. But it's not really we're not there yet.
I have a follow-up on that. Assuming that metal prices go down from here, so will you further cut down the expenditure? Or will it remain at the current levels?
If the metal prices are going down from this level, we are we have a different or we have a new situation. And we have sort of contingency plans, which we can put in place. Some of them will include or partly they will probably include exploration, but it will include everything else too. So it's sort of what happens if I think we have actions available to defend sort of a stable ongoing business for Bulidin in a wide variety of situations. And that's what we try to do.
And then we try to avoid to do too much of a desperate jumps left to right. I think we're going to trim or expand or maneuver with the market situations as they are coming whether it's up or down.
Thanks. Thanks a lot for
We have a question from Mr. Gustaf Sundstrom from Europencer Bank. Please go ahead.
Thank you, operator. Just two quick follow ups. First regarding Ithik, do you expect to increase production out of the satellite deposit in Ithik in Q4 as compared to Q3?
We really look at it as one super pit, if you like, made up of several mining areas. One of them is in Salmi area satellite and then we have a few in the main pit. But we are balancing that in order to maximize the output given where we are doing maintenance on crushers, what kind of where we have the loaders and what kind of truck fleet we have available, what kind of waste drop programs we're running at individual times. So this is a we have a sort of a function called the dispatcher. It's like a control room for all the trucks and shovels and loaders and crushers.
So we have an overview and we go along sort of day by day, month by month, week and so on quarter by quarter and of course the 1, 10 and 20 year plans and put that all together. So we are not looking at Thalomyrari as being a separate mine, which we are expanding separately. We have a sort of capacity in the fleet and the drills and the trucks and whatever. So we manage that as good as we can to maximize value and to keep grades, which are varying a lot in different parts here on relatively stable levels and in line with the guidance we have given.
All right. Thank you. And just one question regarding Bulidin area. What appears just from the numbers to be very weak recoveries, is that purely a result of the increased smelter slag? And if so, what should one expect going forward in regards of the amount of smelter slag?
Yeah. It's a little bit of an odd quarter with the additional or with the unusual mix of slag and ore. And I don't think we have anything else than that of importance.
All right. Great. Thanks.
We have a follow-up question from Mr. Amit Tansuri from Societe Generale. Please go ahead.
Yes. I have a question on I think diesel tax liability. I'm not sure if I've missed you on that. But as I remember, we paid some amount to tax authorities last quarter. So could you please share the current status on that?
Thank you.
Yes. You're exactly right. We did pay into the tax authorities last quarter and we have appealed the ruling and the ruling is now in the 12, which is the lower Swedish Administrative Court, where we can expect a judgment sometime before the end of the year in best case. And I think because this is a if we lose we will appeal and if the tax authorities lose they will also appeal because this is a for them a matter of principal interest how to handle these kind of situations. So we are very likely to end up in the first half of next year in the appeal Swedish appeal court on the administrative side, come Marestan.
So that's the status.
Okay. Thank you.
Our next question comes from Mr. Owen Sklar from Goldman Sachs. Please go ahead.
Hi, Lennox. Just a quick question on M and A. I mean, it's been discussed in the past. And looking forward towards 2015, after you finish this CapEx, it's not really clear what you're going to use the cash for if you're keeping to your original dividend policy. It would be great if you could just give an overview of whether that's something you'd still consider in the long run.
Thanks. We are interested in buying
mines, but we are company or as market for projects and mines are looking up or more objects are probably going to be available. The problem is that it seems like the sellers are not going to give up any assets cheap. And as of now, we have seen the M and A activity has the activity has increased. The number of deals have not moved much. So we continue to be actively looking.
And we are going to do something I have no comment on and I have no idea really. We have the cash available or the funding, the financial hassle to do something. And it depends on if there are opportunities we might do something it could happen. Got it.
Thank you.
There are no further questions on the telephone.
And neither in the room. So I guess it's time to wrap this up. Any final words, Fernand?
No. A fairly a good quarter, but a bit boring. We have no big surprises either positive or negative and the markets are looking quite stable and flat. Of course, there are big macro changes happening around us both risks to the negative and plus. We have a lot of new mines coming, but we are also seeing a lot of mines closing.
We are seeing TC changing as a result of those changes. I think we as always are in interesting times and I think Voliden is in good shape. I think next year will be very, very exciting.