Boliden AB 2009-10-261
Bildplatshållare
Interim ReportJanuary – September 2009
Lennart EvrellPresident & CEO
Johan FantCFO
Boliden AB 2009-10-262
Third quarter 2009
MarketStrong Chinese demandGlobal demand:*
– Zinc: -7% YoY and +5% from Q2-09– Copper: -9% YoY and -3% from Q2-09
High copper and zinc pricesRe-starts of zinc smelter and mine capacityTight supply of copper concentrates – pressure on TC/RCHigher prices for by-productsStronger SEK
* Source: CRU, Boliden calculations
Boliden AB 2009-10-263
Third quarter 2009
BolidenRevenues MSEK 6,960 (7,513)Operating profit MSEK 949 (-142)Operating profit excl. process inventory revaluation MSEK 734 (125)Higher than average grades – lower towards end of periodIndustrial zinc sales increased Q3 vs Q2Zinc smelters on full production: +13% Q3 vs Q2Copper smelters on reduced productionAitik expansion on planCash flow MSEK 610 (-117)
Boliden AB 2009-10-264
Group EBIT development
-500
0
500
1000
1500
2000
2500
Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309
MSEK
Quarterly EBIT
Quarterly EBIT excl PIR*
* EBIT excl Process Inventory Revaluation
Boliden AB 2009-10-265
The Market
Boliden AB 2009-10-266
Global IP slowly improving
Global IP
-15.0
-10.0
-5.0
0.0
5.0
10.0
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09
Yea
r ove
r yea
r %
Source: Reuters Ecowin, Boliden calculations
*
Based on: USA, Eurozone, China and Japan, GDP (PPP) weighted
Boliden AB 2009-10-267
IP – China grows, mature countries slowly improving
Eurozone (Seas. adj.) - Manufacturing Japan (Seas. adj.) - Manufacturing USA (Seas. adj.) - Manufacturing China (value added) - total industry
Source: Reuters EcoWin
Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul06 07 08 09
Year
ove
r yea
r %
-40
-30
-20
-10
0
10
20
Boliden AB 2009-10-268
China dominates base metals demand
China42%
Other Asia22%
Europe19%
North America10%
Other7%
Source: Cru
China34%
Other Asia23%
Europe23%
North America12%
Other8%
Source: Cru
Q2 20092008
China27%
Other Asia28%
Europe26%
North America13%
Other6%
Source: Cru
Copper
Zinc
China34%
Other Asia27%
Europe22%
North America11%
Other6%
Source: esimtates by CRU
Boliden AB 2009-10-269
Zinc – positive trend continues
0
100 000
200 000
300 000
400 000
500 000
600 000
700 000
800 000
900 000
Tonnes
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
USD/Tonne
Zinc price (LME average)
USD/tQ3-09 vs period
Q3 08 1,773 - 1%
Q4 08 1,189 + 48%
Q1 09 1,174 + 50%
Q2 09 1,476 + 19%
Q3 09 1,757 -
Zinc price over 2,000 USD/tonne in OctoberInventories increasingPrice development leads to supply increase
Quarterly average
2003 2004 2005 2006 2007 2008 2009
Boliden AB 2009-10-2610
Zinc TCs up and premiums flat
Zinc metal price premium
0
50
100
150
200
250
300
350
400
USD per tonneof metal
US Midwest Delivered Europe ex-works Far East (Western)Source: CRU, Brook Hunt
2005 2006 2007 2008 2009
Zinc treatment charge (TC)
0
100
200
300
400
500
600
USD/ t of concentrate
Realised TC (including price participation) Spot TC - AsiaSource: Brook Hunt, CRU
2006 2007 2008 2009
Realised in Q3 based on quarter to date zinc price
Concentrate availability higher – spot TC higherRealised TC up as the zinc price increasedPremiums flat, sales to industrial buyers higher
Boliden AB 2009-10-2611
Copper – continued price increases
0
100 000
200 000
300 000
400 000
500 000
600 000
700 000
800 000
900 000
1 000 000
Tonnes
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
10 000
USD/Tonne
Copper price (LME average)
USD/tQ3-09 vs period
Q3 08 7,693 - 24%
Q4 08 3,940 + 48%
Q1 09 3,435 + 70%
Q2 09 4,676 + 25%
Q3 09 5,840 -
Boliden copper price hedge contracts:– Coverage rate approximately 65%*– USD prices 5,757 and 7,606 in 2009 and 2010 respectively
* Of outstanding metal positions in 2009-2010 based on forecasted production
Quarterly average
2003 2004 2005 2006 2007 2008 2009
Boliden AB 2009-10-2612
Copper - continued pressure on spot TC/RC
Copper treatment charge
0
20
40
60
80
100
120
USD/t of concentrate
TC spot China buying terms TC benchmark
Benchmark 2009
Source: CRU
2006 2007 2008 2009
Copper metal price premium
0
40
80
120
160
200
USD per tonneof metal
Spot Copper premium CIF W. Europe Benchmark CIF Europe
Source: CRU, Brook Hunt
2005 2006 2007 2008 2009
Tight market for copper concentrate put pressure on TC/RCScrap market remained tightMine production unchanged - smelter output reducedLess tight metals market - premiums slightly lower
Boliden AB 2009-10-2613
By-products
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
180 000
200 000
jan-03apr-03jul-03okt-03jan-04apr-04jul-04okt-04jan-05apr-05jul-05okt-05jan-06apr-06jul-06okt-06jan-07apr-07jul-07okt-07jan-08apr-08jul-08okt-08jan-09apr-09jul-09
Tonnes
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
USD/Tonne
0
100
200
300
400
500
600
700
800
900
1 000
1 100
1 200
jan-03apr-03jul-03okt-03jan-04apr-04jul-04okt-04jan-05apr-05jul-05okt-05jan-06apr-06jul-06okt-06jan-07apr-07jul-07okt-07jan-08apr-08jul-08okt-08jan-09apr-09jul-09
USD/oz
0
5
10
15
20
25
jan-03apr-03jul-03okt-03jan-04apr-04jul-04okt-04jan-05apr-05jul-05okt-05jan-06apr-06jul-06okt-06jan-07apr-07jul-07okt-07jan-08apr-08jul-08okt-08jan-09apr-09jul-09
USD/oz
Lead Gold Silver
Substantially higher pricesBut only lead higher in SEK
Boliden AB 2009-10-2614
SEK further strengthened vs the USD
5
6
7
8
9
10
11
12
13
2003 2004 2005 2006 2007 2008 2009
USD/SEKEURO/SEK
EUR/SEK EURO/SEK Q average USD/SEK USD/SEK Q average
USD/SEK (quarterly average)
USD/SEKQ3-09 vsperiod
Q3 08 6.31 + 16%
Q4 08 7.79 - 6%
Q1 09 8.40 - 13%
Q2 09 7.92 - 8%
Q3 09 7.29 -
USD/SEK hedge contracts (forward)– Rates are 8.42 and 8.26 for 2009 and 2010 respectively– Sold volumes 112 and 688 MSEK for 2009 and 2010 respectively
Boliden AB 2009-10-2615
Business area Mines
Boliden AB 2009-10-2616
Mines EBIT development
Higher than averagehead grades, peaking in Q3Higher metal pricesLower zinc and leadvolumes but higher for other metals
0
200
400
600
800
1000
1200
Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309
MSEK
Quarterly EBIT
Boliden AB 2009-10-2617
Mines’ zinc production
Comments on Q3 2009 versus Q2 2009
0
200
400
600
800
1,000
1,200
1,400
1,600
Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009
Milled ore, ktonnes
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Zinc metal content, tonnes
Milled ore Zinc metal content
Tara– High grades compensated for
lower milled production– Start-up problems with new mill.
Will also impact Q4
Garpenberg– High grades compensated for
lower milled production– Lower grades and hard ore at
end of quarter
Boliden area– Metal content down, lower
grades and milled production
Boliden AB 2009-10-2618
Mines - Production and grades
TARA
0
10 000
20 000
30 000
40 000
50 000
60 000
Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09
tonnes
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
10,0%
Metal content, Zn (t) Ore grades, Zn act. Ore reserve grade, Zn ave.
GARPENBERG
0
5 000
10 000
15 000
20 000
25 000
30 000
Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09
tonnes
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
Metal content, Zn (t) Ore grades, Zn act. Ore reserve grade, Zn ave.
BOLIDEN AREA
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09
tonnes
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Metal content, Zn (t) Ore grades, Zn act. Ore reserve grade, Zn ave.
AITIK
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09
tonnes
0,00%
0,05%
0,10%
0,15%
0,20%
0,25%
0,30%
0,35%
Metal content, Cu (t) Ore grades, Cu act. Ore reserve grade, Cu ave.
Boliden AB 2009-10-2619
Mines’ copper production
Comments on Q3 2009 versus Q2 2009Aitik
– High grades, peaked in Q3– Metal content increased from a
strong Q2 2009
Boliden area– Mill production from inventory,
metal content lower
0
1,000
2,000
3,000
4,000
5,000
6,000
Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009
Milled ore, ktonnes
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Copper metal content, tonnes
Milled ore (Aitik) Copper metal content
Boliden AB 2009-10-2620
AITIK production areas
S2
Boliden AB 2009-10-2621
AITIK production areas
67
Boliden AB 2009-10-2622
AITIK copper mine expansion
Project is on planIn operation from April 1, 2010Mined ore – from 18 to 36 Mtonnes in 2014Copper volumes +50%Life of mine extended to 2026
22
Boliden AB 2009-10-2623
Business area Smelters
Boliden AB 2009-10-2624
Smelters EBIT development
-500
0
500
1000
1500
2000
Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309
MSEK
Quarterly EBIT
Quarterly EBIT excl PIR*
Increased zinc productionLower cost YTD Improved metal prices for zinc smeltersDifficult market conditions affecting copper smelters
* EBIT excl Process Inventory Revaluation
Boliden AB 2009-10-2625
Zinc metal production up
Comments on Q3 2009 versus Q2 2009
0
50,000
100,000
150,000
200,000
250,000
Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009
Zinc feed, tonnes
0
20,000
40,000
60,000
80,000
100,000
120,000
Zinc metal prod, tonnes
Zinc feed, total Zinc metal production
Odda– Metal production +14%– Back to full capacity in
September
Kokkola– Metal production +12%– Back to full capacity in August
Boliden AB 2009-10-2626
Copper Smelters on reduced production
Comments on Q3 2009 versus Q2 2009
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009
Copper feed, tonnes
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Copper cathode prod, tonnes
Copper feed, total Copper cathode production
Rönnskär– Stable production
Harjavalta– Reduced production– Extended maintenance stop
Bergsöe (lead)– Maintenance stop
Shortage of all feeds
Boliden AB 2009-10-2627
Financials
Boliden AB 2009-10-2628
Financial summary
MSEK Q3 09 Q3 08 YTD 09 YTD 08Revenues 6,960 7,513 19,279 24,700Operating profit (EBIT) 949 -142 2,391 1,495
EBIT excl Process Inventory Revaluation 734 125 1,480 1,582
EBIT Margin % * 11% 2% 8% 6%
Free cash flow 610 -117 -1,298 1,371
Earnings per share, SEK 2.50 -0.49 6.14 5.07
Gearing 48% 37%
* EBIT Margin excl Process Inventory Revaluation
Boliden AB 2009-10-2629
Group EBIT Q3 2009versus Q3 2008 and Q2 2009
MSEK Q3 2009 Q3 2008 Q2 2009EBIT 949 -142 654Process Inventory Revaluation 215 -267 177EBIT excl Process Inventory Revaluation 734 125 477
Deviation 609 257Specification of deviation:Volume 91 153Costs 6 -53Prices & Terms 361 424
Metal prices and terms 198 487
Realised Metal- Currency hedge 173 -61
TC/RC terms 41 32
Premiums -51 -18
Definitive pricing (MAMA) 0 -16
Currency effects 163 -261whereof translation effects 14 -1
Others -12 -6Deviation 609 257
Effect in each quarterRealised Metal-, Currency hedge 32 -141 93Definitive pricing (MAMA) 14 14 30
Increased Productionin zinc smelters and high production and grades in Aitik
Average Cu up 25%
Average Zn up 19%
Average USD/SEK down -8%
Boliden AB 2009-10-2630
Group EBIT YTD 2009versus YTD 2008
MSEK 2009 2008EBIT 2,391 1,495Process Inventory revaluation 911 -87EBIT excl Process Inventory Revaluation
1,480 1,582
Deviation -102Specification of deviation:Volume 8Costs 236Prices & Terms -1,549
Metal prices and terms -2,200
Realised Metal- Currency hedge 839
TC/RC terms 47
Premiums -246
Definitive pricing (MAMA) 11
Currency effects 1,238whereof translation effects 100
Others -35Deviation -102
Effect in each quarterRealised Metal-, Currency hedge 315 -524Definitive pricing (MAMA) 30 19
Costs in localcurrency down -3%
Average Cu down - 41%
Average Zn down -30%
Higher spot sales
Average USD/SEK up 27%
Boliden AB 2009-10-2631
EBIT per Business Area
MSEK Q3 09 Q3 08 YTD 09 YTD 08Smelters excl ProcessInventory Revaluation 101 150 95 873
Mines 727 74 1,618 731
Other -94 -99 -232 -22
EBIT excl Process Inventory Revaluation 734 125 1,480 1,582
EBIT 949 -142 2,391 1,495
Higher value in Others YTD due to profit elimination in internal sales
Boliden AB 2009-10-2632
Operating costs impacted by weaker SEK
Total MSEK 7,759 YTD
Share of total operating costs YTDChange in operating costs, local currencies
YTD 2009 vs 2008
Energy -3%Consumables -0%Personnel expenses -0%Transport costs -15%External services -13%Depreciation & other +10%
Total operating costin local currency
-3%
Total operating costin SEK
+3%
Energy; 18%
Transport; 5%
Consumables; 18%
Depreciation & other
; 13%
External services; 17%
Personnel; 29%
Boliden AB 2009-10-2633
Cash flow
MSEK Q3 09 Q3 08 YTD 09 YTD 08Op profit before depreciation (EBITDA)* 1,340 208 3,565 2,553
Changes in working capital* 211 1,085 -1,163 2,370
Capital expenditure -1,081 -1,157 -3,646 -3,091whereof Aitik 36 -565 -678 -2,317 -1,736
Free cash flow 610 -117 -1,298 1,371*Includes Process Inventory Revaluation
Inventory value decreased by 124 MSEK from Q2 2009Aitik 36 capital expenditure of 565 MSEK in Q3 2009 (1,105 MSEK in Q2 2009)
Boliden AB 2009-10-2634
Capital structure
GearingSEK bnUnless otherwise stated
30Sept2009
30 Sept 2008
Total Asset 32.2 27.0
Capital employed 26.0 21.3
Shareholders' equity1 16.0 14.2
Net debt 7.6 5.3
Gearing % 48 37
Equity/asset ratio, % 50 53
Average maturity in years 4.0 5.1
Average interest rate, % 2.18 5.76
Interest duration, years 2.2 0.1
Liquidity reserves2 6.5 8.4
37% 39%
52%55%
48%
0%
10%
20%
30%
40%
50%
60%
Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009
1. Shareholders’ equity includes the value of outstanding hedge contracts
2. Defined as unutilised credit lines and cash less outstanding commercial papers
Boliden AB 2009-10-2635
Sensitivity analysis
Changein metalprices,+10%
EBITeffect, SEK m
Change inUSD, +10%
EBITeffect, SEK m
Change inTC/RC,+10%
EBITeffect,SEK m
Zinc 485 USD/SEK 700 TC Zn 70
Copper 335 EUR/USD 420 TC/RC Cu 60
Lead 105 USD/NOK 95 TC Pb -15
Gold 90
Silver 85
Estimate of the 12-month effect on Group EBIT on September 30 2009, based on planned production volumes. Effects of hedging, contracted TC/RC or stock exposures are not taken into account.
35
Boliden AB 2009-10-2636
To summarize Q3 2009
MarketStrong Chinese demandHigh pricesTight market for copper concentrates – TC/RC under pressureZinc re-starts
BolidenStrong EBIT and Cash FlowHigher than average head grades – peaked in Q3Stable productionAitik on plan
Boliden AB 2009-10-2637
Going forward
Head grades average or below at end of periodIncreasing exploration activitiesCommissioning problems with mill in Tara
Boliden AB 2009-10-2638
Forward-looking statements
Certain statements in this presentation are forward-looking, and the actual outcome could be materially different. Such forward-looking statements are based on Boliden’s present plans, estimates, assumptions, projections and expectations and are subject to risks and uncertainties. In addition to the factors explicitly discussed, other could have a material effecton the actual outcome. Such factors include, but are not limited to, general economic or political conditions, fluctuations in exchange rates, interest rates and in metal prices, production disruptions, technological issues, interruptions in supply, actions of courts, regulators, government agencies, competitors, customers, suppliers, employees and other third parties.
Boliden produces metals that make modern life work