Ladies and gentlemen, very welcome to this presentation of our first quarterly report 2012. Today's presenter will be Lennart Evrell, our CEO, and Mikael Staffas, our CFO. There will be a Q&A session after the presentation, please Lennart, go ahead.
Good morning. We have presented this morning the first quarter result of the year. I think basically it's a good quarter. Good in smelters, I think good in mines too, even though slightly lower in some numbers, mostly because of the refurbishing or changes we have done in Aitik. Slightly weaker global demand. We have seen slower growth in China, still on a good level in the general economy. The metal prices have turned a little stronger from Q4, last year was a gradual decline in the metal prices, which turned up in the first quarter a little. We were doing sales of SEK 10.3 billion in the quarter, compared to SEK 10.1 billion in the year before. Earnings before process inventory revaluation was SEK 1.217 billion as compared to SEK 1.5 billion the previous year.
We did the same kind of earnings before process inventory revaluation of close to SEK 1.5 billion in Q4. The cash flow was strong because of the good earnings, also because of inventory reduction and in spite of big investments or CapEx. We have started up the electronics recycling plant at Rönnskär, the copper smelter, that has been going well. We have some new copper opportunities. One in Aitik, a further expansion possibility, and a new discovery north of or between Gällivare and Boliden. 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. As before, China is driving part of, or much of it, with very strong growth numbers, even though they are on a slightly lower growth level.
The construction and vehicle production or car industry are the two industries which are the primary drivers of copper and zinc. To the left, we see the construction market where China is going down to lower but still very healthy growth numbers in the construction. We see the U.S. trend, which is very positive and broke through the break even, 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 zero but has had a negative development quarter. In the car industry, you can say that China is on the same level as the previous year. Europe is slightly negative, the U.S. numbers are positive. On zinc prices, we have seen the gradual decline through 2011, which turned up in 2010.
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 fourth 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, 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, we start with the mines, earnings were SEK 820 million compared to SEK 1.1 billion and compared to SEK 600 in the fourth quarter of 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 Boliden area. Better prices, as I said. The projects, all the projects we are, Kankberg, the gold mine will start at mid-year with tellurium production in fourth quarter and the first gold production coming in Q3.
Maybe a little bit even before, but around the term of between Q2 to Q3. We have the Garpenberg project, which is continuing. It's in a very hectic stage, and it's going on plan. We have identified two new growth opportunities, now we come back to those. The grades in Boliden area are lower, 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 first quarter. If we look at the Aitik project, we have rebuilt one crusher with the effect of SEK 50 million. That turned out as we planned.
We are on the ramp-up plan from 2010 through 2014, when we are expecting to reach full production of 36 million tons. As you can see on this chart at the bottom here, we are almost at 33 million yearly pace if we look at the previous 12 months or the previous four quarters. The Kankberg project is going well. It's on plan. Some mine production in the concentrator in the first quarter. First gold production will be at the turn of Q2 and Q3. Tellurium, again, in the fourth quarter, we are not seeing major risk for any cost overruns there. We're planning to stay on the SEK 475 million CapEx. Going on to Garpenberg. It's on plan. The personnel shaft, we have two shafts down to 1,200 meters. We are now putting in the different mechanical equipment into the shafts.
In the production shaft, we are going to the final diameter, we're slightly delayed on that one, it's of no importance, we will recover that. Industrial area building has been started, it's a very hectic time. It's a lot of people on the site right now. We then turn to business area smelters. Earnings were SEK 349 million as compared to SEK 226 the year before. We were doing SEK 326 in Q4, but it's still an improvement from Q4. High volume of three metals compared to the fourth quarter. Good prices and terms on the copper side, weaker in the zinc smelters. 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, there are things happening, but we are confident that we are going to have strong production in the second quarter. Small changes on the copper side smelting in addition to the project start, as I said. In zinc, we had good production in Kokkola, and we are having a good result from the action plans and stable production in Odda. We had a maintenance stop in Odda, which was originally planned to be taking place in April. The electronic scrap recycling started with the first product produced on the 18th of January. We have produced in the first quarter 19,000 tons. If we multiply that by four, we are on 80,000, of course, we have been in a startup phase, we didn't produce in most of January.
As compared to 12,000 the previous year, 12 times four, that's 48, we're saying we're going from 45,000 all together with the new investment as well as what we are processing in the existing equipment. The CapEx will land on plan SEK 1.3 billion. 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 revaluation of a little bit more than SEK 1.2 billion. We'll come through in a few slides to see how that has been developed. We also had a quite healthy cash flow of SEK 888 million, which would help our lower inventory levels, we'll touch a little bit on that further as well. The CapEx level landed just below SEK 1 billion for the quarter, which is in line or a little bit below what we've indicated before with SEK 5 billion for the total year. The gearing ratio is down at this moment to 24%, we'll touch upon that as well.
You look at the bridge to compare, 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 has been well communicated, we have worse prices in our forward contracts for Q1 compared to Q4, this should be in line with what could have been expected. We do have a negative currency effect of SEK 54 million. We do have a cost situation where we are roughly SEK 55 million 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, SEK 68 million higher. This one is also linked mainly to higher production, specifically higher production in Tara, where there has been, as you know in mining, the depreciation is linked to the production level.
We have a positive effect from the internal profit elimination that comes with the lower inventory levels that we have. It is quite natural with that. We have a positive effect here compared to last quarter, we had a SEK 125 one-off charge that we do not have a similar charge this quarter. You compare to last year, you can see that the volume is quite stable. However, as you can note, there is a big plus and minus in this number as we have much higher ore volumes, but the grade has been lower in Aitik, those factors take each other out. The price and terms are lower with SEK 169 million compared to what they were last year. We do have a positive currency effect compared to last year, we do have a higher cost situation.
The cost is driven by the inflation that we saw during 2011 that we have spoken about before, also by the higher volumes that we have had. You move on and look at the cash flow, this is of course a positive number in the bottom of SEK 888 million positive. You can see that a large part of it comes from the change in inventories, which has contributed with SEK 749 million. We had inventories at the end of Q1 that were low, that were on the low level that we can sustain. This is of course not an effect that can continue, we had low inventories at that particular point in time. You can also see here that the cash flow investment, SEK 915 million, in line, was likely 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 5.2 billion 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 a press release this morning announced two things. First of all, that we have found a new copper discovery, which is between Gällivare and Boliden. It's 10 or 100 kilometers north of the Boliden area. We are looking at the continuation of Aitik up to 36 million tons and beyond. We're saying that we have sufficient resources and reserves in Aitik to carry an even higher production rate. 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. Now we are coming with some exciting things in between of the normal reporting times.
If we look at Laver, what has happened there is it's an old Boliden copper mine, which was in production between 1938 and 1946. We produced altogether 1.3 million tons of ore in an underground mine, high grades copper and gold, 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. 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. 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. 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 2009. It's a porphyry copper deposit. It's an Aitik-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. It's a very accessible ore body. A total of 57 drill holes, and 21,700 meters have been completed through April.
We have the copper gold moly bearing mineralization identified but is not yet classified as Mineral Resource. We hope and plan to have it classified as Mineral Resource at the end of the year. As you can see on the table, it's a very large deposit. We think our deposit, but the exploration results indicates 500 million-700 million tons, with an average grade of 0.15-0.25, and gold between 0.10 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 potentially a very big thing, and therefore it's going to take a long time. 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 is built on or based on the resources and reserves we have defined, and it is in Aitik. The background is, of course, the various significant increases we have here. If you compare the black line, which is 10 years of current production, we can see that reserves are high. If we add to it the resources, Aitik could carry a much higher production capacity. We are looking at basically a growth possibility from 36 million tons per year to 45. 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 million tons per year.
This is basically for permitting and for planning. It is nothing I suggest anyone should think of at this point, but we are going to talk about it in the permitting, and therefore, the numbers will be around. 45 seems to be an interesting study that we have started. The summary of the two projects is that we have new potential for copper production in Boliden. In Aitik, it is debottlenecking almost activity where most of the infrastructure is already in place, and we think we can go to 45 million tons without too big difficulties or major too big investments. In Laver, it is at a very early stage. It is a discovery. We do not even have it as a Mineral Resource, and I am sure you will ask a lot of questions 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 a low grade and high volume potential. To conclude our presentation for this morning and turn into the general picture. The electronics recycling should be in full production in the second quarter. Boliden area, we will start the new gold mine in Kankberg at the mid-year gold end of second quarter or beginning of third quarter and tellurium in Q4. We have in Boliden area also the Maurliden East and Maurliden, the two small open pit mines. Maurliden 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 SEK 130 million in the second quarter.
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 billion in the year. Again, the new copper opportunities are exciting. With a disclaimer and certainly around Laver, it is a very early stage, and I would like to underline that. With that, we conclude my presentation and Mikael's, and if you step over here, we are prepared for your questions.
Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad. Our first question comes from Mr. Oskar Lindström 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? Also on that same theme, will this in any way have any effect on your CapEx plans? Yes, those were the two questions.
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 a 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. On our own sales side, things are going well. The third question, no changes in our CapEx plans.
Okay, thanks. Another question regarding the Aitik expansion plans. You said that you hope to have moved 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 Laver is not Aitik. Laver is a separate.
Sorry, yes.
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 Reserves. Aitik has already defined Mineral Resources and Mineral Reserves which are sufficient for the planned, or not the plan, but the expansion possible.
This pre-feasibility project that you have in Aitik, what are the 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 saying-
In Aitik
It should have been resources. I'm sorry, I think you got that. Repeat your question, please.
In Aitik, your expansion plans here, which you're talking about going beyond the 36-45 and potentially 65. Do you have any more concrete dates which we should be looking for? Is it something that 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 45 case, and certainly it's a long way to the 65 case. What is defined is that, or what is decided is to start a pre-feasibility of the expansion, and that we have started. When that continues, we are going to announce what the conclusions are. It's going to take quite a long time before those results are ready.
This pre-feasibility project could run in for the rest of the year, basically.
Oh, easily.
Easily. Okay. That is what I was looking for. Thank you very much.
Yep.
Our next question comes from Mr. Julian Beer from SEB Enskilda. Please go ahead.
Gentlemen, a 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, eight million tons, 6% below the level in Q3. You indicated that was impacted by the grinder renovation. Was all of that lower rate due to grinder renovation, and would you therefore expect it to pop back up in Q2?
It is always issues happening in all the mines every quarter. You can say that asking us as clean as that is always difficult. I would say for the purpose of understanding what happens, yes, it was a rebuilding. The results of the rebuildings have been going well, we are quite optimistic. However, the availability of the heavy equipment we talk about, it needs time. There is always going to be a degree of uncertainty, we are fairly bullish on what we see right now. It is not a guarantee we will have to follow that one or two or maybe three quarters before we can draw the bottom line there.
Okay, that's clear. Still on Aitik, the 20 basis points grade guidance for Q2. Is that lower grade just for Q2, or could it be for longer?
I think we are going to be on the north side of 0.2 for several quarters. Frans, you have probably 0.22 is the assumed average for this year, so for modeling. We are talking about small margins now. Maybe 0.20 is on the low side of what we're going to see in the following quarters.
Okay. 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 that cause those swings and how you see operations there going forward?
I think we have in addition to the swings, 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 Boliden Way programs, continuous improvement programs, and we have a very good commitment in broad groups of our personnel in Tara. I'm very positive about what we're seeing in Tara. I think it is swinging, as you're saying, it's also a good feeling for what's going on there.
Okay, that sounds good. Finally on smelters. You said that you saw better prices and terms in the quarter versus the previous quarter. Could you just say specifically which price and terms were better? Because some of the spot indications were clearly weaker.
Spot indications are weaker, 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, 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 Pöyhönen from Carnegie. Please go ahead.
Hello. I have a couple of questions. First of all, regarding the ramp-up of the E-scrap in Rönnskär. 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 second quarter 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. 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 second quarter.
Okay, thanks. Also, regarding the exciting opportunities for Aitik going forward, when you model this in different scenarios and so on, I am specifically referring to that the International Copper Study Group just issued their outlook on next year's copper supply and demand balance, where they see copper moving into surplus again. What would be the low or worst case scenarios regarding long-term copper prices that you would tend to use when you calculate the sensitivity 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 the long-term prices for copper has almost always been below the real copper prices. I think you see a risk for real decline would a surplus appear in the market. At the same time, I think the sentiment and the direction is rather for higher long-term prices.
Okay.
How can that go together? I think that a surplus is, if we look at the first quarter here, demand was not very strong for copper. Prices went up. That is basically because supply did go down more. Supply has a real difficulty to follow demand. We are seeing, and quarter after quarter, the same tendency. Demand is slightly more negative than we thought, supply is even more negative than we thought. 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 Odda, which you moved to February. Would you specify the cost for that stop?
That was fast. We have a very committed team now. We are really going to make it in Odda, and that's tough because treatment charges are one step forward, one step backward, kind of. When we decided we had some situations that came up 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 put back-
Small effect on-
money on it. It was a quite marginal.
Okay
in the first quarter.
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 later.
Okay.
Okay.
Thanks.
Our next question comes from Mr. Rob Clifford from Deutsche Bank. Please go ahead.
Yes. Hi, Lennart. Three quick questions. Just firstly on Laver 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? The third one is, can you just talk about where you're seeing cost pressures right now for this year?
With Laver, as all the investments, we have a discounting factor. The WACC we're working is real 10%, which is slightly higher than many other companies in our sector. That's an indication. I think that when it comes to Laver, it's far too early to have much of an opinion because by the time, if that, say, or Laver 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. Long-term prices will have changed, probably upwards, I don't know, by then. We talk about the decision point, which is several years ahead, and thereafter it's many years for construction. It's a very long-term project.
It's a big one, the short answer is the WACC number, which we communicate. On the second one, on Aitik output, we are on the expansion plan from where we started up. We said 36 million tons will be 2014. 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. On the cost side, what is inflation you can take? It looks a little bit better now.
Yeah. Let me just quickly touch upon that. I think you've heard us saying before that when we looked at 2011 over 2010, we saw an inflation of roughly 8%. When we're looking at 2012 over 2011, that is clearly getting into a much more better zone. We're seeing numbers of roughly 3% when we're looking at 2012 over 2011. The inflation pressure is weaker than we've seen before. What is keeping it up is the oil price. Electricity prices, though in our context, are helping us down. Then we have a lot in between.
Right. Thanks. Cheers.
Our next question comes from Mr. Daniel Major from Merrill Lynch. Please go ahead.
Yeah. 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 and 65 million tons. Second question, just on the maintenance shutdowns at Odda and Rönnskär 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 on Odda and Rönnskär. What's the impact on production you're expecting?
We have the SEK 150 million 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 more shovels and trucks and whatever. It's marginal. The infrastructure will be possible as we think. Basically as it is right now. No major infrastructure apart from the mining fleet or equipment. When it comes to 65, it's no doubt that the concentrator will not be able then. If we would make 45, that's really on, and I'm sure we will do some smaller debottlenecking there. We feel that we have a good capacity in the concentrator. Basically, 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.
We have a big project with new mills and new flotation, and maybe some additional flotation cells, but within the infrastructure also for 45. The big investment is for 65 obviously, and 45 is quite modest.
Okay, cool. Thank you.
Our next question comes from Mr. Christian Kopfer from Nordea Markets. Please go ahead.
Thanks. Good morning. Just two quick follow-ups. Firstly, did you see any impact, positive or negative, from the scrap build-out in the first quarter?
Yeah, we actually had a little positive impact from it.
Good.
Of course, when you're in startup mode, you also have a lot of cost and a lot of people and a lot of things going on, which is costing. The net result was a plus. It's nothing you need to take too big. There is a plus, which if you look at the modeling for Rönnskär itself, there is a plus which is visible there.
Is it possible to specify it? Is it below SEK 50 million or?
Absolutely, it's below 50. It's marginal but visible.
Okay.
I don't remember the numbers, but it's nothing which is. No, I think you get there.
Okay, sure. On Aitik, 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 three 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 below 0.25 for several years now. Then we're going down, and then we hit the high grades again.
Okay, no change with the Okay, thanks.
2015, I think, is the guidance we have given. Through 2015 it's closer to 0.20.
Yeah. Thanks.
Our next question comes from Mr. Ola Södermark from Swedbank. Please go ahead.
Yeah. Hello and good morning. I have a question regarding Garpenberg and then the expansion there. You stressed that there's a 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. It's really if we get traffic jams in the underground system. We think we have planned it well, and unless something unexpected is happening, I think we are in good control of it, so we shouldn't have anything.
Okay, thank you.
I remind you that if you'd like to ask a question to the speakers, please press zero one on your telephone keypad. Our next question comes from Mr. Justin Gauld from Citigroup. Please go ahead.
Hi, good morning, gents. Just three questions from my side. Could you give us a split of your capital expenditure guidance of SEK 5 billion for 2012? Whereabouts do you see 2013 CapEx guidance? Secondly, how much of the exploration will be spent through P&L account for 2012? Finally, what's the copper volume guidance on the mining side for 2012, if you can give any thoughts? Thank you.
I can start quickly with the CapEx number. We've guided SEK 5 billion for this year. We haven't issued any guidance for next year, we have been clear that the Garpenberg Project, which is the one that's dragging most of this CapEx, is going on through to 2013 as well. We cannot give a more detailed number as we're not through that far into planning yet.
2013 is going to be a big CapEx year as well.
It'll be a big CapEx year, exactly where, we don't know.
Okay.
help me with the second and third question again.
The exploration expenditure you expect to pass through P&L account for 2012, given you are doing some more exploration than was disclosed historically. Third question is your copper volume guidance on the mining side for 2012.
The 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. We don't have additional information in addition to the conclusion you can draw from that information.
On the exploration side, do you have a number? How much will be the expenditure for 2012?
How much it will be spent?
It's just south of SEK 300.
300.
Okay.
Thank you.
Thanks.
Our next question comes from Mr. Julian Beer from SEB Enskilda. Please go ahead.
Yes, thanks for taking a couple of follow-ups. Firstly, on the net debt and inventory side, Mikael 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, it's difficult to give. You saw that the inventories were down by SEK 700 million from a level that was maybe slightly higher than what we normally need. That was happening in a quarter when prices were increasing. Without being too much detail around that, you can see swings of this nature going the other way around as well.
Okay, that's fine. 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 capitals by a step with the E-scrap expansion coming on?
No, that was built up already during 2011, and maybe overbuilt up because we were slightly late in getting the Bura going. We were about a month late. That should not need any more increases.
Okay, great. Thanks, Mikael. Then just on Laver, 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 a lot.
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Our concluding remark is we think it was a good quarter. We have a lot of projects going on right now and two new opportunities being formed about this morning. I think Boliden is in good shape. Thank you very much.