Gentlemen. Very welcome to this presentation of our First Quarterly Reports 2012. Today's presenter will be Lennart Eberlle, our CEO and Mikael Staffals, our CFO. There will be a Q and A session after the presentation. So please note go ahead.
Good morning. We have presented this morning the Q1 result of the year and I think basically it's a good quarter, good in smelters. I think good in mines too even though it's slightly lower in numbers and mostly because of the refurbishing or changes we have done in Aitik. Slightly weaker global demand. We have seen slower growth in China, but still on a good level in the general economy.
The metal prices have turned a little stronger from Q4, but then last year was a gradual decline in the metal prices which turned up in the Q1 a little. We were doing sales of SEK 10,300,000,000 in the quarter compared to SEK 10,100,000,000 in the year before. Earnings before process inventory revaluation was SEK 1,217,000,000 as compared to SEK 1,500,000,000 the the previous year. We did earnings the same kind of earnings before process inventory valuation of close to SEK 1,500,000,000 in Q4. The cash flow was strong because of the good earnings, but also because of inventory reduction and in spite of big investments or CapEx.
We have started up the electronics recycling plant in Atranshare, the copper smelter and that has been going well. And we have some new copper opportunities. 1 in Aitik, a further expansion possibility and a new discovery north of or between Gjelovar and Bulid and more on that later. If we go into the market more in general, we have seen a general decline in industrial production in the world. And as before, China is driving part of or much of it with very strong growth numbers, even though they are on a slightly lower level growth level.
The construction and vehicle production or car industry are the 2 industries which are the primary drivers of copper and zinc. And to the left, we see the construction market where China is going down to lower, but still very healthy growth numbers in the construction. And we see the U. S. Trend, which is very positive and broke through the breakeven or they are into growth now in the construction market, which is of course a long time since that happened.
Europe is up and down around 0, but has had a negative throughout the quarter. In the car industry, you can say that China is on the same level as the previous year. Europe is slightly negative and the U. S. Numbers are positive.
On zinc prices, we have seen this gradual well, the gradual decline from in through 2011, which turned up in 2010. And if you look at the horizontal lines on the price diagram, you can see that we have a slight uptick from the quite low zinc price levels in the 4th quarter. The same on copper is quite a step upward in metal prices compared to the low Q4. The other metals of importance, gold is increasingly important for us even though we have quite big hedge programs in place. Both investments we are starting up this year are in gold.
Gold is continuing to be on a high level. Silver is slightly down compared to last year. And lead is looking quite a lot the same as zinc. On the treatment charges, we can see that the tough conditions for zinc smelters are continuing with low spot treatment charges, but and also the benchmarks levels are lower than the previous year. On the other side, we can see copper, which is going in the opposite direction with slightly higher treatment charges or benchmark levels.
Spot levels are also down in copper. Premiums are basically in line with before. If we do a review of our two business areas and we start with the mines. Earnings were SEK820 1,000,000 compared to SEK 1,100,000,000 and compared to SEK 600,000,000 in the Q4 2011. We had good volume of zinc production and lead production and gold, but we had lower volume of copper and that is essentially because of the rebuilding going on in Aitik and lower grades in Bulin area.
Better prices, as I said. The projects all the projects we are. Clankberg, the gold mine will start in at midyear with tellurium production in Q4 and the first gold production coming in Q3, maybe a little bit even before, but around the term of between Q2, Q3. And we have the GAPENBERG project, which is continuing. It's in a very hectic stage and it's going on plan.
We have identified 2 new growth opportunities and I will come back to those. The grains in Boliden area are lower and which means lower output in the Boliden area. Aitik, as I said, was basically impacted by the planned and well communicated rebuilding of equipment there. On the zinc side, high production and high grades in both Tara and Garpenberg and stable production in general in Tara, which has a very convincing development in the Q1. If we look at the Aitik project, we have rebuilt 1 crusher with the effect of 50,000,000 that turned out as we planned.
We are on the ramp up plan from 2010 and through 2014 when we are expecting to reach full production of 36,000,000 tonnes. And as you can see on this chart at the bottom here, we are almost at 33,000,000 yearly pace if we look at the previous 12 months or the previous 4 quarters. The Cancay project is going well. It's on plan. Some mine production in the concentrator in the Q1.
First gold production will be at the turn of Q2 and Q3. Tellurium again in the Q4 and we are not seeing major risk for any cost overruns there. We're planning to stay on the SEK475,000,000 CapEx. Going on to Garpenberg, it's on plan. The personnel shaft, we have 2 shafts down to 1200 meters.
We are now putting in the different elevators or mechanical equipment into the shafts. And in the production shaft, we are going to the final diameter and we are slightly delayed on that one, but it's of no importance. So we will recover that. Industrial area building has been started and it's a very, very hectic time. It's a lot of people on the site right now.
If we then turn to business area smelters, earnings were €349,000,000 as compared to 2 26,000,000 a year before. We were doing €326,000,000 in Q4, Q4, but it's still an improvement from Q4. High volume of free metals in the 4th compared to the 4th quarter. Good prices and terms in the copper on the copper side weaker in the zinc smelters. And of course a big thing for the smelters is the startup of the electronics recycling which has been going basically on plan.
It's always difficult. I know there are things happening, but we are confident that we are going to have strong production in the Q2. Small changes in on the copper side smelting in addition to the project start as I said. In zinc, we had good production in Kokola and we are having a good result from the action plans and stable production in Oda. We're going to have or we had a maintenance stop in Oda, which was originally planned to be taking place in April.
The electronic scrap recycling started with the first product produced on the 18th January. We produced in the Q1 19,000 tonnes. If we multiply that by 4, we are on 80 1,000 and the plan is to be on 120,000. But then of course, we have been in a start up phase and we didn't produce in most of January as compared 12,000 the previous year and 12 times 4 that's 48,000 and we're saying we're going from 45,000 altogether with the new investment as well as what we are processing in the existing equipments. The CapEx will land on plan SEK 1,300,000.
And with that Mikael can you take us through the financials?
Thank you, Lennart. Let me briefly take you through the financials. If you look into the summary, I think you've seen the numbers already. We had a EBIT excluding process inventory valuation of a little bit more than SEK 1,200,000,000 and we'll come through in a few slides to see how that has been developed. We also had a quite healthy cash flow of SEK888,000,000 which was helped by lower inventory levels and we'll touch a little bit on that further as well.
The CapEx level landed just below SEK 1,000,000,000 for the quarter, which is in line or a little bit below what we've indicated before with SEK5 1,000,000,000 for the total year. The gearing ratio is down at this moment to 24% and we'll touch upon that as well. If you then look at the bridge to compare and we start comparing with Q4 in 2011, there has been an increase in prices and terms. However, it has been slightly offset the fact that we have and it's been well communicated, we worse prices in our forward contracts for Q1 compared to Q4, but this should be in line with what could have been expected. We do have negative currency effects of €54,000,000 We do have a cost situation where we are roughly €55,000,000 more over Q4 that can be partly explained by higher production volumes, but we do have higher costs for energy specifically petroleum that comes into play here.
Depreciation, dollars 68,000,000 higher. This one is also linked mainly to higher production specifically higher production in Tara where there's been as you know in mining, the depreciation is linked to the production level. And then we have a positive effect from the internal profit elimination that comes with the lower inventory levels that we have. It's quite natural with that. And then we have a positive effect here compared to last quarter where we had a
this quarter.
If you compare to last year, you can see that the volume is quite stable. However, there's as you know, there's a big plus and minus in this number as we have much higher ore volumes, but the grade has been lower in Aitik and those factors take each other out. The price and terms are lower with €169,000,000 compared to what they were last year. We do have a positive currency effect compared to last year and we do have a higher cost situation. The cost is driven by the inflation that we saw during 2011 that we had spoken about before, but also by the higher volumes that we've had.
If you move on and look at the cash flow, this is of course a positive number in the bottom of $888,000,000 positive. You can see that it comes a large part of it comes from the change in inventories, which has contributed with £749,000,000 We had inventories at the end of Q1 that were low, were on the low level that we can sustain. So this is of course not an effect that can continue, but we had low inventories at that particular point in time. You can also see here that the cash from investment €915,000,000 in line or slightly below what it will be for the rest of the year. The capital structure with the good cash flow during the quarter, we have come into a net debt of SEK 5,200,000,000 and a gearing of 24% at this stage.
With that, I will leave it back to you, Lennart, to discuss a little bit about the new opportunities.
We have in the press release this morning announced 2 things. First of all that we are have found a new copper discovery, which is between Gjellevaria and Boliden. It's 10 or 100 kilometers north of the Boliden area. And we are looking at the continuation of Aitik up to 36,000,000 tonnes and beyond. And then we're saying that we have sufficient resources and reserves in Aitik to carry an even higher production rate.
And therefore, we have started to evaluate further expansions. The background for both of these projects are the exploration results that we have had in the previous years. We have seen a very good development of our mineral reserves and resources. We have updated those basically in the February of each year. And now we are coming with some exciting things in between of the normal reporting times.
If we look at Lava, what has happened there is it's an old Buliden micropper mine, which was in production between 1938 and 1946. We produced altogether 1,300,000 tons of ore in an underground mine, high grades copper and silver and we followed some veins of high grades. Since then, this area has been not active. There have been some periodic exploration activities by us and also by international companies in the area. But here we did something very important and that is because of the success of Aitik of working with large volumes of low grades and with good economy, we said we shall modify our strategy and look at much larger volumes here.
And follow that we have got permits of exploration of big land areas. We own the land in most of the areas here. You can on the map also see the location in the north of Sweden. And with this drilling program, we have been going on we have been seeing an increasing resource or potential and we have got very good indications of a large deposit. We started the drilling in 2,009.
It's a por free copper deposit. It's an ITIC type mineralization large scale and low grades. You can see on the picture the blue lines or the blue holes are evaluated and we have a number of new holes which are not yet analyzed. The cross section is looking like this. And as you can see from this, it's shallow.
It's not deep down, but it's immediately coming up to the surface. So it's a very accessible ore body. A total of 57 drill holes and 20 1,007 100 meters have been completed through April. We have the copper gold moly bearing mineralization and identified, but is not yet classified as mineral resource. And we hope and plan to have it classified as mineral resource at the turn of at the end of the year.
As you can see on the table, it's a very large deposit. It's we think or deposit, but exploration results are 500 indicates 500,000,000 to 700,000,000 tonnes with an average grade of 0.15 to 0.25 and gold between Fontaine 10 grams and 0.15 grams per ton. We will continue to drill in the area. We will prepare for mining concessions and we are going to start this is a very big this is potentially a very big thing and therefore it's going to take a long time. And therefore we will start with some of the environmental work already in the fall of 2012.
We'll continue the drill program and the impact study will be in the mid of 2012. From that, we can go over to something which is sooner or more concrete. It's built on or based on the resources and reserves we have defined and it's in Aitik. The background is of course the very significant increases we have here. And if you compare the black line which is 10 years current production, we can see that reserves are high.
And if we add to it the resources, the Aitik could carry a much higher production capacity. We are looking at basically a growth possibility from 36,000,000 tonnes per year to 45,000,000 tonnes. We have decided to start a pre feasibility, which will include a lot of different things and for certain tailings expansion and more mining equipment. We are going to look at even higher production numbers. We are talking about a possibility at a later stage to look at 65,000,000 tonnes per year.
But this is basically for permitting and for planning. It's nothing I suggest it in the permitting and therefore the numbers will be around. But 45 seems to be an interesting study that we have started. The summary of the 2 projects is that we are we have new potential for copper production in debottlenecking almost activity where most of the infrastructure is already in place. And we think we can go to 45,000,000 tons without 2 big difficulties or major 2 big investments.
In about all the details and we are shy of being precise on much things. We are showing what we know and that is that we have a discovery here. And the indications are low grade and high volume. To conclude our presentation for this morning and turn into the general picture. The electronics recycling should be in full production in the Q2.
Boliden area, we will start the new gold mine in Cancunpey at the mid year, gold end of Q2 or beginning of Q3 and Tellurium in Q4. We have in Boliden area also the Marliden East and Marliden the 2 small open pit mines. Marliden East is combined copper zinc and we will see a gradual decline in copper and we will see a gradual increase in zinc. The grades in Aitik will be slightly lower or planned to be slightly lower approximately 0.2%. Maintenance programs will have an EBIT effect of €130,000,000 in the second quarter.
So also this year, we take the bulk of the yearly maintenance in the smelters in the second quarter. The guidance on CapEx is about SEK 5,000,000,000 in the year. And again, the new copper opportunities are exciting. With the disclaimer and certainly around Lager. It's a lot of it's a very early stage and I would like to underline that.
And with that, we conclude my presentation on Mikael. And if you step over here, we are prepared for your questions.
Our first question comes from Mr. Oscar Lindstrom from Danske Bank. Please go ahead.
Yes. Hello. Can you hear me? Yes. Wonderful.
Just one specific question on the global and Chinese slowdown, which you are mentioning. To what extent do you see any changed behavior from your clients? For example, have you had any broken contracts or delays in deliveries from clients? And also on that same theme, will this in any way have any effect on your CapEx plans? Yes, those were the two questions.
I think you can to make a short story on the market. I think it is a somewhat hesitant market. It's not a bad market. It's a good market. It's good metal prices.
The movements are modest and I think it is more an uncertainty what is going to happen next. I think that when we look at our own customers, we see basically good development. We are not voicing any concerns in the direction you're saying. It looks good and it seems as if some customers are having lower demand for volumes, we can quite easily take back those volumes with other customers that are buying from us and from other suppliers. So on our own sales side, things are going well.
And the third question, no, we are no changes in our CapEx plans.
Okay. Another question regarding the Itiq expansion plans. You said that you hope to have move this into mineral resources by the end of the year. What other concrete steps can we expect in, let's say, the coming 12 months with regards to this expansion project?
Make it clear here that Lave is not Aitik. Lave is a separate one. That's the one which is mineral or exploration results. It's not classified as mineral reserves. There we plan to define it in the end of the year as mineral Aitik has already defined resources and reserves which are sufficient for the planned or not the plan, but the expansion possible.
So this pre feasibility project that you have in Aitik, what are the sort of next steps that are going to make it a little bit more concrete from our perspective when we should expect further expansion? Could you repeat the question? I was wondering if I could
it should have been resources. I'm sorry, but I think you got that. Repeat your question please.
In Aitik, your expansion plans here which you're talking about going beyond the 36 percent to 45 percent and potentially 65%. Do you have any more sort of concrete dates, which we should be looking for? Is this something that's going to be you're going to give us more information about during the course of this year? Or is it more of a long term project?
It's long term in the sense that it's going to be several years before we have any new production in the or what is decided is to start or what is decided is to start a pre feasibility of the expansion and that we have started. So when that continues, we are going to announce what the conclusions are. But it's going to take quite a long time before those results are ready.
So this pre feasibility project could run-in for the rest of the year basically?
No, easily. Easily. Okay.
That's what I was looking for. Thank you very
Yes.
Our next question comes from Mr. Julien Baer from SVB and Kepler. Please go ahead.
Gentlemen, very good morning to you. Very nice clean set of results. Thank you for that. I have three questions. Firstly, on Aitik.
The mill rate in the first quarter 8,000,000 tons, 6% below the level in Q3 and you indicated that was impacted by the grinder renovation. Was all of that lower rates due to grinder renovation? And would you therefore expect it to pop back up in Q2?
It's never one. It's always issues happening in all the mines every quarter. So you can say that asking as clean as that is always difficult. But I would say for the purpose of understanding what happens. Yes, it was a rebuilding.
The results of the rebuildings have been going well and we are quite optimistic. However, the availability of the heavy equipment we talk about it needs time. So there is always going to be a degree of uncertainty. But we are fairly bullish on what we see right now. But it's not a guarantee we will have to follow that 1 or 2 or maybe 3 quarters before we can draw the bottom line
there. Okay. That's clear. So on Aitik, the 20 basis points grade guidance for Q2, is that lower grade just for Q2? Or could it be for longer?
That's I think we are going to be on the north side of 0.2 for several quarters. France you have probably some 0.22 is the assumed average for this year, so for modeling. But we are talking about small margins now or but maybe 0.20 is on the low side of what we're going to see in the following quarters.
Okay. So you're not specifically guiding for a lower figure for Q2?
We are looking at 0.2 for Q2.
Okay. All right. Good. Tara, the mill throughput seems to swing quite wildly from quarter to quarter. Could you just talk a little bit about some of the issues of CorSo swings and how you see operations there going forward?
I think we have in addition to the sort of the swings which are not they are never good and I think it's a sign of weakness when it's swinging as much as it does. We have been running our new Bolide and Wave programs, continuous improvement programs. And we have a very good sort of commitment in broad groups of our personnel in Tara. And I'm very positive about what we're seeing in Tara. I think it is swinging as you're saying, but it's also a good feeling for what's going on there.
Okay. That sounds good. And then finally on smelters, you said that you saw better prices in terms in the quarter versus the previous quarter. Could you just say specifically which pricing and terms were better because some of the spot indications were clearly weaker?
Spot indications are weaker, but most of what we're doing are on so spot is low, but most of what we're doing is on benchmark terms. And in copper, it's up from the previous year.
Okay. So it's principally copper, which I guess means that they can be repeated for the rest of 2012?
Should be possible, yes.
Thank you very much.
Our next question comes from Mr. Alexander Villewald from Carnegie. Please go ahead.
Yes, hello. I have a couple of questions. First of all, regarding the ramp up of the e scrap in Reinhard. You mentioned that full production is expected in Q2. Would that include all of Q2?
Or is the run rate at the end
of the quarter please? We are setting the target on full production in the Q2 altogether. There is always reason to give a cautionary statement that running in or ramping up new programs are always an increased level of risk, but the plan is to go full production. For modeling, you can probably take somewhat a cautionary little margin on it. But basically, we are trying to do full production in the Q2.
Okay. Thanks. Also regarding the exciting opportunities for Aitik going forward, when you sort of model this in different scenarios and so on, and I'm specifically referring to that the National Corporate Study Group just issued their outlook on next year's copper supply and demand balance where they see copper moving into a surplus again. What would be the sort of low or sort of worst case scenarios regarding long term copper prices that you intend to use when you calculate the sensitivities for such an expansion?
I would like to rephrase the question slightly, if I may. I would say that the prices we can see if the copper is turning into a surplus would that happen is quite a lot lower than today. The long term prices, which was your precise question, has the opposite trend. More and more of us are seeing that long term prices for copper has always been almost always been below the real copper prices. So I think you see a risk for real decline would a surplus appear in the market.
But at the same time, I think the sentiment and the direction is rather for higher long term prices. And I think how can that go together? Well, it is that I think that a surplus is if we look at the Q1 here, demand was not very strong for copper. Prices went up and that is basically because supply did go down more. Supply has a real difficulty to follow demand.
So we are seeing in quarter after quarter the same tendency. Demand is slightly more negative than we thought, but supply is even more negative than we thought. So because of the inabilities to produce at full pace with lower grades and lower mines or deeper mines and more complex situations.
Okay. Thanks. Also two quick questions. First regarding the stop in Oda, which you moved to February. Would you specify the cost for that stop?
That was fast. We did we have a very committed team now. We are really going to make it in order and that's tough because treatment charges are 1 step forward, 1 step backward kind of. But when we decided we had some situations that came up and we said we shall and we had planned for the possibility of doing this maintenance stop. We did it in a short period of time and I don't think you should sort of put back money on it.
It was a quite marginal cost in
the Q1.
Okay. And
also group costs, what should we expect the underlying group costs on a yearly basis?
Mikael, you have a number for that?
No. I will have to get back with that.
Okay. Thanks.
Our next question comes from Mr. Rob Clifford from Deutsche Bank. Please go ahead.
Yes. Hi, Leonard. Three quick questions. Just firstly on labor and indeed Aitik. What return hurdles are you looking for when you're analyzing these projects in terms of your IRRs?
Secondly, on Aitik, I know you personally have spent a lot of time sorting through this. Can we take it that you're now comfortable that it's going to operate well at steady state and you're happy with the outcomes from your suppliers there? And the third one is, can you just talk about where you're seeing cost pressures right now for this year?
With Lava as all the investments, we have a discounting factor. The WACC we're working is real ten percent, which is slightly higher than many other companies in our sector. So that's an indication. And I think that when it comes to lager, it's far too early to have much of an opinion because by the time if that say or lava would develop to the point of decision to build a mine. While we have so many different things both when it comes to discounting factors, The return requirements, I don't think will be lower than we have today, maybe higher I don't know.
And long term prices will have changed probably upwards I don't know, by then. So we talk about the decision point which is several years ahead and thereafter it's many years for construction. So it's a very long term project. But it's a big one and the short answer is the WACC number and which we communicate. Output, we are on the expansion plan from where we started up and we said 36,000,000 tonnes will be 2014.
And we have been sometimes a little bit behind that number as we all know and we have been sometimes in the early days a little bit above. I think we are on the plan as we speak right now. And on the cost side, what is inflation you can take? It looks a little bit better now.
Yes. Let me just quickly touch upon that. I think you've heard us saying before that when we looked at 11 over 10, we saw an inflation of roughly 8%. When we're looking at 12 over 11 that is clearly getting into much more in a better zone. We are seeing numbers of roughly 3% when we're looking at 12% over 11%.
So the inflationary pressure is weaker than we've seen before. Yes. And what is keeping it up is the oil price. Electricity prices though in our context are helping us down and then we have lots in between.
Great. Thanks, Chet.
Our next question is from Mr. Daniel Leon from Merrill Lynch. Please go ahead.
Just a question on your expansion at Aitik. You mentioned expansions in the tailings dam and the mining fleet.
I was just wondering if
you're able to talk about what expansions you'd need to put in the crushing and processing capacity for both the expansion to 45,000,000 and 65,000,000 tonnes? And then second question, just on the maintenance shutdowns at Haya Volta and Wanshar in Q2. Could you give some detail on how much production you're expecting to be lost on those maintenance shutdowns? Thanks.
How much production we lost on what?
On the maintenance in on higher base revenue on Shaw, what's the impact on production you're expecting?
We have the €150,000,000 EBIT effect. The volume, I think you can translate in your modeling what the volume impact is because it's basically to a large extent a volume loss.
Okay.
When it comes to the CapEx requirements for growing Aitik, I think for 45, we need obviously to mine higher tonnage That means we need to drill more. We need to need more shovels and trucks and whatever. But it's a marginal the infrastructure will be possible as we think basically as it is right now. No major infrastructure apart from the mining sort of fleet or equipment. When it comes to 65,000,000, it's no doubt that the concentrator will not be able then if we would make 45,000,000 that's really on and I'm sure we will do some smaller debottlenecking there.
But we feel that we have a good capacity in the concentrator. So basically it will we think it could be sufficient for 45. We know it's not going to be sufficient if we would go for the higher number. And then we have a big project with new mills and new flotation. And flotation may be some additional flotation cells, but within the infrastructure also for 45.
But the big investment is for 65,000,000 obviously and 45,000,000 is quite modest.
Okay. Cool. Thank you.
Our next question comes from Mr. Christian Kopzer from Nordea Markets. Please go ahead.
Thanks. Good morning. Just some two quick follow ups. So firstly, did you see any impact positive or negative from the scrap build out in the Q1?
Yeah. We had a we actually had a little positive impact from it. Of course, when you're in start up mode, you also have a lot of cost and a lot of people and a lot of things going on, which is costing. But the net result was a plus. It's not it's nothing you need to sort of take too big.
But there is a plus, which if you look at the modeling for Rundgrensje itself, there is a plus which is visible there.
Is it possible to specify there? I mean is it below €50,000,000 or
No. Absolutely it's below €50,000,000. It's marginal, but visible some I don't remember the numbers, but it's nothing, which is no, I think you'll get there.
Okay. Sure. And on Aitik, I mean, you're still doing this mine quite substantially below the mine average head grade. When do you expect to come up to 0.25, which is the average in the mine?
In the literature we have on our website from the previous Capital Market Day, I think we are going to be there for additional 3 years I believe. The high grades are in the bottom of the pit and we are now on the higher sides and it's going to be around below 0.25 for several years now. And then we are going down and then we hit the high grades again.
Okay. So no changes there. Okay. Thanks.
2015, I think, is the guidance we have given. Through 2015, it's closer to 0.20.
Yes. Thanks.
Our next question comes from Mr. Ola Sodermaier from Swedbank. Please go ahead.
Yes, hello and good morning. I have a question regarding Garpenberg and the expansion there. You stressed that this is quite high activity at the area right now. It's going to affect the production or is it smooth production despite the high activity at the area?
We have separated as much as possible all the construction work. We talk basically what is going on underground because on the surface, it's of no importance at all. So it's really if we get traffic jams in the underground system. We think we have planned it well. And unless something is unexpected is happening, I think we are in good control of it.
So we shouldn't have anything.
Okay. Thank you.
Our next question comes from Mr. Justin Gowell from Citigroup. Please go ahead.
Yeah. Hi. Good morning, gents. Just three questions from my side. Could you give us a split of your capital expenditure guidance of SEK 5,000,000,000 for 2012?
And whereabouts do you see 2013 CapEx guidance? Secondly, how much of the exploration will be spent through P and L account for 2012? And finally, what's the copper volume guidance on the mining side for 2020, if you can give any thoughts? Thank you.
I can start quickly with the CapEx number. We've guided €5,000,000,000 for this year. We haven't issued any guidance for next year, but we have been clear that the Garpenberg project which is the one that's dragging most of this CapEx is going on through 2013 as well. We have but we cannot give a more detailed number as we're not through that far in the planning yet.
2013 is going to be a big CapEx year as well.
It's going
to be a big CapEx year, but exactly where we don't know.
Okay.
Then let me help me with the second and third question again.
The exploration expenditure, you expect to pass through profit and loss account for 2012 given you are doing some more exploration than was disclosed historically? And the third question is your copper volume guidance on the mining side for 2012.
[SPEAKER SEBASTIEN DE MONTESSUS:] Exploration will be expensed. And the guidance for production, we don't give more than in the different maintenance shutdowns, the guiding on grades as we just did. So we don't have additional information in addition to the conclusion you can draw from that information.
Okay. Sorry. And on the exploration side, do you have a number? How much will be the expenditure for 20
12? How much it will be?
It's just south of 300,000,000. 300,000,000, okay. Thank you.
Thanks.
Our next question comes from Mr. Julian Beer from SVN SKILLDOM. Please go ahead.
Yes. Thanks for taking a couple of follow ups. Firstly, on the net debt and inventory side. Michael said that inventories were considered low at the end of the quarter. How much working capital would you need to add at current prices to bring inventories back to normal levels?
I don't want to give you an exact number of that because it goes up and down and it's difficult to give. But you saw that inventories were down by $700,000,000 from a level that was maybe slightly higher than we would normally need. And that was happening in a quarter when prices were increasing. So without being too much detail around that, you mean you can see swings of this nature going the other way around as well.
Okay. That's fine. And the inventory overhang which you reduced was that mainly concentrate on copper?
That we had in the end of Q4? It was a mixture of lots of things. It was a mixture of copper, but it was also silver and silver rich lead concentrates that were in the books at the end of Q4.
Okay. There's no need to increase working capital by step with the e scrap expansion coming on?
No. That is that was built up already during 20 11 and maybe overbuilt up, because we were slightly late in getting the Bure going. We were about a month or about a month late. So that should not need any more increases.
Okay. Thanks, Mikael. And then just on lava. I know you don't want to talk details, but just looking at the sketch, it looks as if the top of the resource grade ore is literally just below the topsoil. Is that the case?
Or is there also an overburden to be removed? Should it be commercial?
It's very thin, so it's basically up to the surface.
Great. Okay. Thanks
There are no questions from the telephone at this time.
Okay. And then our concluding remark is, we think it was a good quarter and we have a lot of projects going on right now and 2 new opportunities informed about this morning. So I think Boliden is in good shape. Thank you very much.