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Q3 Interim Report 2016
Lennart Evrell President & CEO
Håkan Gabrielsson CFO
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2011 2012 2013 2014 2015 2016
R4Q,MSEK
MSEK
Quarterly EBIT excl PIR* Rolling 4Q EBIT Rolling Q EBIT excl PIR*
Strong earnings and high mine production
2016-10-20 Boliden Group Q3 2016
* PIR=Process Inventory Revaluation
• Revenues 9,733 (9,764) MSEK • EBIT ex PIR* 1,318 (1,055) MSEK
‒ EBIT 1,529 (880) MSEK • Free Cash Flow 91 (953) MSEK
• Improved market terms • High production Mines • Production disturbances zinc smelters • Maintenance shutdowns in Smelters
-50 (-85) MSEK • Higher inventories Smelters
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Market – Slow demand growth, supply driven market
Macro • Low industrial production growth Base metals markets • Cu, Zn demand growing slowly • Stronger Ni demand
• Zn mine supply down, smelter supply down
slightly • Continued growth in Cu mine supply • Ni supply down
2016-10-20 Boliden Group Q3 2016 3
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jul-15 okt-15 jan-16 apr-16 jul-16 okt-16
USD/t
Zinc price
2016-10-20 Boliden Group Q3 2016
Average price in Q3 vs. period
Q2-16 Q1-16 Q4-15 Q3-15
18% 34% 40% 22%
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016LME inventory Shanghai inventory Price Price Q avg
Zinc price, USD/t KTonnes Q3
Note: Prices until 11 October 2016
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Copper price
2016-10-20 Boliden Group Q3 2016 5
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LME inventory COMEX inventory Shanghai inventory Price Price Q avg
Copper price, USD/t KTonnes
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Average price in Q3 vs. period
Q2-16 Q1-16 Q4-15 Q3-15
1% 2% -2% -9% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note: Prices until 11 October 2016
Q3 Q4 Q1 Q2 Q3
Nickel price
2016-10-20 Boliden Group Q3 2016 6
Average price in Q3 vs. period
Q2-16 Q1-16 Q4-15 Q3-15
16% 21% 9% -3%
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016LME inventory Price Price Q avg
Nickel price, USD/t KTonnes
Note: Prices until 11 October 2016
Q3 Q4 Q1 Q2 Q3
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Zinc, copper and nickel prices
Normal C1 – Zinc Normal C1 – Copper USD/ton USD/ton
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Zn average price Zn max priceZn min price 50th perc75th perc 90th perc
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Cu average price Cu max priceCu min price 50th perc75th perc 90th perc
Source: Wood Mackenzie October 2016, Thomson Reuters Datastream
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Ni average price Ni max priceNi min price 90th perc75th perc 50th perc
Normal C1 – Nickel USD/ton
2016-10-20 Boliden Group Q3 2016 7
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Gold price, USD/troy oz.
Gold, silver and lead prices
2016-10-20 Boliden Group Q3 2016
Lead Gold
Silver Average price in Q3 vs. period
Q2-16 Q1-16 Q4-15 Q3-15
Gold 6% 13% 21% 19%
Silver 17% 32% 33% 32%
Lead 9% 7% 11% 9%
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1 0001 5002 0002 5003 0003 5004 0004 5005 000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Lead price, USD/t
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Silver price, USD/troy oz.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note: Prices until 11 October 2016
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Boliden market term index
2016-10-20 Boliden Group Q3 2016 9
Mines
2016-10-20 Boliden Group Q3 2016 10
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2011 2012 2013 2014 2015 2016
R4Q, MSEKMSEK
Quarterly EBIT Rolling 4Q EBIT
Mines – Strong quarter with high production
2016-10-20 Boliden Group Q3 2016 11
• EBIT 804 (260) MSEK ‒ 621 MSEK in Q2 2016
• Capex 748 (563) MSEK
• Higher metal prices • High production in most mines • Kevitsa positive EBIT • Good cost control
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2013 2014 2015 2016
Metal content, kt
Milled ore, kt Nickel
Milled ore pro forma* Milled ore Metal content pro forma** Metal content
2016-10-20 Boliden Group Q3 2016 12
Mines – Production
• High production
• Aitik – low crusher availability
• Boliden Area – high milling, less favorable ore mix
• Garpenberg – stable and high production
• Kevitsa – high milled volume
• Kylylahti – record milled production
• Tara – stable production, high milled volume
(*) Milled ore incl Kevitsa (**) Metal content incl Kevitsa
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Metal content, kt
Milled ore, mt Copper
Milled ore Metal content pro forma** Metal content
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Metal content, kt
Milled ore, mt Zinc
Milled ore Metal content
Smelters
2016-10-20 Boliden Group Q3 2016 13
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R4Q, MSEKMSEK
Quarterly EBIT excl PIR* Rolling 4Q EBIT Rolling 4Q EBIT excl PIR*
2016-10-20 Boliden Group Q3 2016
* PIR=Process Inventory Revaluation
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• EBIT ex PIR* 613 (825) MSEK ‒ 397 MSEK in Q2 2016
• Capex 280 (315) MSEK
• Improved market terms • Higher Zn TC vs Q2 • Production disturbances zinc smelters • Maintenance shutdowns -50 (-85) MSEK
‒ -210 MSEK in Q2 • Higher inventories
Smelters – Production disturbances at zinc smelters
Smelters – Production
• Stable processes at Harjavalta • Maintenance shutdowns at Rönnskär
• Production disturbances • Lower recoveries at Kokkola • High feed in Odda • Odda P200 test runs, project ahead of
plan
2016-10-20 Boliden Group Q3 2016 15
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Metal production,
ktTotal feed,
ktZinc
Feed, total Metal production
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Metalproduction,
ktTotal feed,
ktCopper
Feed, total Metal production
Financials
2016-10-20 Boliden Group Q3 2016 16
Strong earnings
2016-10-20 Boliden Group Q3 2016 17
MSEK Q3 2016 Q3 2015 Q2 2016
Revenues 9 733 9 764 9 596
EBITDA 2 653 1 746 1 940
EBIT 1 529 880 912
Process inventory revaluation (PIR) 211 -175 11
EBIT ex PIR 1 318 1 055 901
EBIT ex PIR pro forma 1 067 885
Investments 1 028 880 956
Acquisitions - - 5 979
Free cash flow 91 953 -4 794
Earnings per share, SEK 4,15 2,36 2,26
Net debt / equity ratio 40 24 43
Financial development
Q3 vs. Q3, Higher metal prices & production Mines
2016-10-20 Boliden Group Q3 2016 18
Higher metal prices
MSEK Q3 2016 1,318
Q3 2015 - pro forma 1,067
Deviation 251
Specification of deviation Volumes 164
Prices and Terms (incl. hedges) 509
Whereof currency effects 23
Costs -183
Depreciation -222
Items affecting comparability -
Other -18
Deviation 251
Higher milled volume Mines Production disturbances Smelters Lower free metals
EBIT excl. PIR pro forma*
Higher volume Mines Production disturbances Smelters
Higher volume Mines Aitik capital intensive areas Kevitsa
*The comparison period includes Kevitsa that was acquired 1 June 2016
Q3 vs. Q2, Higher metal prices and lower costs
2016-10-20 Boliden Group Q3 2016 19
Seasonally lower costs Less maintenance Smelters Higher reclamation previous quarter
Higher metal prices
MSEK Q3 2016 1,318 Q2 2016 - pro forma 885
Deviation 433
Specification of deviation Volumes -145
Prices and Terms (incl. hedges) 597
Whereof currency effects 89
Costs 306
Depreciation -90
Items affecting comparability -209
Other -26
Deviation 433
Less favorable ore mix Boliden Area Internal profit elimination
EBIT excl. PIR pro forma*
Kevitsa
Pensions Tara Q2 Acquisition costs Kevitsa Q2
*The comparison period includes Kevitsa that was acquired 1 June 2016
Free cash flow impacted by inventory build-up
2016-10-20 Boliden Group Q3 2016 20
MSEK Q3 2016 Q3 2015 Q2 2016
EBITDA excluding PIR 2 442 1 921 1 929
Changes in working capital -1 117 36 837
Inventories -807 -500 368
Payables -152 443 701
Receivables -151 92 -233
Other -7 1 0
Cash flow from investments -981 -879 -944
Cash flow from acquisitions 0 0 -5 943
Financial items* -75 -51 -95
Tax paid -125 -69 -308
Other -54 -5 -269
Free cash flow 91 953 -4 794 Free cash flow excl. Kevitsa acquisition 91 953 1 148
Free cash flow
* Q2 2016 includes -39 MSEK cost for Kevitsa bridge financing
Balance sheet
2016-10-20 21 Boliden Group Q3 2016
SEK bn (Unless otherwise stated)
30 Sep 2016
30 Jun 2016
Total Assets 51.7 50.4
Capital employed 42.1 40.6
Shareholders' equity 27.6 26.2
Net debt 11.1 11.2
Gearing, % 40 43
Loan duration, years 3.4 3.6
Average interest rate, % 1.2 1.2
Interest duration, years 0.2 0.4
Net payment capacity 5.5 5.1
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Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
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%MSEK Net debt Gearing
Going forward
• Well positioned in the metal market
• Metal prices – low macro visibility
• Mines ‒ Aitik: volatile production, Cu 0.21% (2016),
0.25% (2017-2019)
‒ Garpenberg: Zn 4.5%, Ag 120 g/ton (until FY 2017)
‒ Tara: lower Zn grade in Q4 vs Q3
‒ Kevitsa & Boliden Area: soft ore Q3
• Smelters ‒ No planned maintenance Q4
‒ Odda P200: ahead of plan, ramp-up continues Q4
• Capex ‒ 2016: slightly above 4 BSEK
‒ 2017: 5 BSEK
2016-10-20 Boliden Group Q3 2016 22
Disclaimer
• This presentation has been prepared by Boliden for information purposes only and as per the indicated date. Boliden does not undertake any obligation to correct or update the information or any statements made therein. Certain statements in this presentation are forward-looking and are subject to risks and uncertainties.
• Nothing contained herein shall constitute any representation or warranty as to accuracy or completeness. Boliden has not made any independent verification of the information obtained from third parties.
• Nothing in this material shall be construed as an offer or solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction.
• Boliden does not accept any liability whatsoever arising from or in connection with the use of this information.
• Save as by prior approval in writing, this material may not be copied, transmitted or disclosed, whether in print, electronic or any other format. All rights to the material are reserved.
2016-10-20 Boliden Group Q3 2016 23
2016-10-20 24 Boliden Group Q3 2016
Appendix
2016-10-20 Boliden Group Q3 2016 25
Market balance – zinc and copper
2016-10-20 Boliden Group Q3 2016
Source: CRU September, October 2016, Boliden calculations
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Zinc – global market Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Metals demand, kt 3 316 3 306 3 361 3 316 3 329 3 345 3 420 3 380 Year on year change 0% -1% -1% 0% 0% 1% 2% 2% Smelter production, kt 3 514 3 349 3 489 3 396 3 453 3 270 3 380 3 335 Year on year change 5% 7% 7% 1% -2% -2% -3% -2% Mine production, kt 3 349 2 881 3 328 3 252 3 014 2 632 2 901 2 916 Year on year change 9% 4% 4% 2% -10% -9% -13% -10% Metal balance, kt 198 43 128 80 124 -75 -40 -45 Concentrate balance, kt 82 -231 85 113 -188 -394 -222 -159 Copper – global market Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Metals demand, kt 5 539 5 020 5 489 5 529 5 708 5 067 5 583 5 585 Year on year change 3% 0% 0% 1% 3% 1% 2% 1% Smelter production, kt 5 584 5 406 5 518 5 558 5 631 5 567 5 671 5 684 Year on year change 7% 4% 3% 0% 1% 3% 3% 2% Mine production, kt 3 424 3 599 3 828 3 793 3 936 3 869 4 050 3 958 Year on year change -2% -1% 4% 2% 15% 8% 6% 4% Metal balance, kt -75 297 -51 -73 -180 350 38 99 Concentrate balance, kt -359 -145 45 -78 -65 -95 36 -37
Market balance – nickel and lead
2016-10-20 Boliden Group Q3 2016 27
Nickel - global market Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316
Metals demand, kt 451 476 479 465 471 487 515 492
Year on year change -3% 0% -3% -1% 4% 2% 7% 6%
Smelter production, kt 511 473 497 486 493 468 488 473
Year on year change -4% -5% 3% -5% -3% -1% -2% -3%
Mine production, kt 452 452 545 558 492 448 519 548
Year on year change -34% 5% 4% 4% 9% -1% -5% -2%
Metal balance, kt 59 -3 18 22 23 -19 -27 -18
Lead - global market Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316
Metals demand, kt 2 852 2 705 2 734 2 818 2 934 2 775 2 808 2 866
Year on year change 1% 0% 0% 2% 3% 3% 3% 2%
Smelter production, kt 2 852 2 705 2 734 2 818 2 934 2 775 2 808 2 866
Year on year change 0% -1% -1% 2% 3% 3% 3% 2%
Mine production, kt 1 314 1 045 1 186 1 266 1 276 1 051 1 139 1 215
Year on year change 1% -4% -1% 1% -3% 1% -4% -4%
Metal balance, kt 17 0 -2 12 24 12 18 7
Concentrate balance, kt 119 -131 16 133 139 -187 -67 43
Source: CRU September, October 2016, Boliden calculations
Economic development
2016-10-20
Industrial production, year on year %
Boliden Group Q3 2016
Source: Thomson Reuters Datastream, Boliden calculations for world data
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J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D
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EU28 USA China World
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J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
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EU USA China
Construction – largest segment for Cu and Zn
2016-10-20
Activity, year on year %
Source: Reuters Datastream
Boliden Group Q3 2016
China: year on year based on cumulative investments at each point
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2016-10-20
Source: LMC Automotive
Boliden Group Q3 2016
Automotive
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Production of light vehicles, year on year, quarterly data
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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
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Europe USA China World
China – metals demand and economic growth
Source: CRU Ltd, Thomson Reuters Datastream
2016-10-20 Boliden Group Q3 2016 31
Year on year growth %
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Zinc demand Copper demand GDP Industrial production
Zinc TC and premia
• Concentrate market tight, metal market fairly balanced
• Spot TCs in China down • Higher Zn price, realized contract TC up
• Stable premia in Europe
2016-10-20 Boliden Group Q3 2016
Source: CRU September 2016
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US$/t concentrate Treatment charges
Realized TC - European contract
Spot TC, China imports
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US$/t metal Metal premia
Delivered Premia US Midwest Ex-Works Premia EuropePremia Far East - Western
Copper TC and premia
• Mine production ramp-up • Spot TCs stable
• Spot premia up slightly from low level
2016-10-20 Boliden Group Q3 2016
Source: CRU September 2016
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Contract benchmark according to market sources including CRU Contract benchmark according to market sources including CRU
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Contract TC - annual and mid-year benchmarkStandard grade spot TC
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US$/t metal Metal premia
USD tonne
2016-10-20 34 Boliden Group Q3 2016