Boliden — Call Transcript 2018

Speaker 11: Ladies and gentlemen, I'd like to welcome all of you to the Q1 2018 results presentation. My name is Olof Grenmark, head of investor relations. Today we will have a results presentation and a Q&A session led by our President and CEO, Lennart Evrell, and also our CFO, Håkan Gabrielsson. During the Q&A session, please limit yourself to one question at a time. Lennart Evrell, the stage is yours.

Speaker 8: Thank you. Good morning. My 42nd quarterly presentation and my last one. I will continue as the CEO until the 1st of June, a month away. Then I pass over to my successor, Mikael Staffas. Q1 was good. Håkan and I, we will take you through our presentations and give you the main highlights of the quarter. The quarter was good. Basically, everything was stable. We had a slight decline in profit, which is quite a lot, or basically a seasonal effect of winter conditions and after we start up the crusher in Aitik. If we look at the highlights, revenues came to SEK 13.3 billion. That's up from the previous year. Earnings or operating earnings were SEK 2.7 billion compared to SEK 2 billion a year ago, and the free cash flow, SEK 1.4 billion. With that cash flow, we reduced our gearing to 6% from 11% a year ago. As you know, as a result of the good strong balance sheet and strong cash flows, we are going to propose the AGM today, in addition to the normal regular dividend, a one-off dividend. More on that later. High grades in Aitik again. This time you should understand what's happening in Aitik. I'm coming back to that. Basically, the lower volume and high grades are effects of the same event and basically driven by the new crusher installations. The project is going on plan. The crusher is running with ore today. We are doing the start, stop, and testing and taking over criteria with the suppliers. Plenty of work there. Far so good, I think we are over the risks involved in startup periods. It looks good. A particular case or situation in the first quarter was very good safety standards. We have seen our safety records improving over time, but we had certainly a very strong Q1, which is typically a quarter where slip, trip, and fall is coming in volumes with our winter climates and a lot of ice. We have been successful in that area. Markets continue to be good. The general economy in the world is absolutely booming, or is a very strong general economy around the world. Surprisingly enough, I would say that the automotive industry and the construction industries, being part of the global economy development, are not so strong. Not a problem, we have growth in both sectors, but very low in automotive and quite low and lower growth rates than we have seen before in construction. In the general context of a very strong global economy, it is slightly less strong for the segments for the base metals. Strong, but not quite as strong as a general picture may look like. Base metals, high copper prices, or high copper and nickel demand growth. Much more than normal is driven by the developed economies with new energy systems. There is a hype for battery metals and a lot of other things. Lower zinc demand growth, the prices are continuing to be volatile. The zinc and nickel metal demand was good or on that level, with the supply constraints, there was a deficit in both zinc and nickel, whereas we saw a slight surplus in copper. In the concentrate markets, we saw a tight market in zinc concentrate and a quite balanced market in copper concentrates. Looking at the prices, we have this picture we always follow. Of course, we see a good metal price development that's well known to you all. If we compare with the long-term prices or the cost of the industry, I would say that zinc is very high priced. Nickel is, in spite of the positive development, still a low priced commodity. Copper is good, not without being extreme high. That can be seen on this picture where we have the cost of the industry. The yellow line is showing the 90th percentile, where 90% of the mine supply of the different metals are running at positive cash flows. As we can see here, certainly it's very profitable to be a zinc miner. Sorry. It's not so profitable to be a nickel miner. If we combine with the weights of the different metals, we see the light gray line here, very positive development, we see that being compensated or offset by a negative currency development. If we combine the whole market term index for Boliden, set of commodities and currencies, we see that we are on a very high level now. Very favorable market terms. If we then go into the mines. First of all, earnings SEK 1.9 billion compared to SEK 1.5 billion year ago, the CapEx was higher than last year, a lot is going on in many smaller projects, of course, we are working on the final stages of the crushers. Improved EBIT, high metal prices, high metal production. Aitik, high grades in Q1, increased grade guidance in 2018. We are seeing now that when we are mining in the very bottom of the pit, the high-grade areas, we have probably underestimated slightly the grades. That is the reason why we do a slight up or increase of the guidance for the rest of the year. Low milled volume is an effect of the same thing as the grades are high. The new crusher is on the top of the pit, we stood still one week to reconnect from the old crusher into the new system, we have had an on/off situation on a daily basis. Therefore, we have focused our mining in the lower part of the pit where the grades are high, but the volume of ore is low because of this sort of planned and not very surprising disturbances. All in all, copper production is good, but it's a very high grade and lower volume kind of situation. In Tara, we have been in very good areas. We have had very good grades, and Tara is developing well with very high returns given also in apart from the grades, the favorable zinc prices. Winter conditions. As an interesting detail, winter is harsh in the north of Sweden, but this year we can also say winter impacted our underground mining, which we have never said before. I'm referring to Tara, where the whole of Ireland was on a standstill because people couldn't go to work during the heavy snowfall situations there. Funny but true, also underground mines were affected by weather conditions this year. The winter conditions, as I will mention later on, also continued into the second quarter, which is not very typical. If we look at the mine production, first starting with copper, we can see that the bars are low. We produced or had low milled volume, but despite that, we had very good metal production because of the high grades. You can see it very clear on the chart. Zinc, not very dramatic. Nickel, the continued success with Kevitsa, where after the acquisitions we have been able to push volumes and being in good areas. Kevitsa continues to develop very strong. In smelters, this is a picture from one of the other, the second very large investment going on right now, a new acid plant in Harjavalta. Earnings were SEK 640 compared to SEK 835. The decline is due to lower market terms. This is in zinc being the most important. CapEx were SEK 231, down from last year. We see a market with good conditions in general, market terms are going negative to us. Stable production and high free metals in the copper smelters. We had a production record in Harjavalta. The zinc smelters are doing fine. In the quarter, we took one write-off of our fire, which I think we mentioned last time in the lead smelter, Bergsöe. We had a new project. It was a fire. Better than it looks because we got

Speaker 12: Ladies and gentlemen, please continue to stand by. The conference will continue shortly. Please continue to stand by. Thank you. Ladies and gentlemen, once again, please continue to stand by. The conference will resume shortly. Thank you for your patience.

Speaker 8: With that, Håkan, lead us through the financials.

Speaker 5: Thank you, Lennart. Good morning. As you've seen from the report I'm showing today, we reported a Q1 with revenues of SEK 17.3 billion and an EBIT excluding process inventory of SEK 2.7 billion. That is roughly 32% up compared to the same quarter last year, and it's slightly down on Q4, which I'm sure you remember was one of our better quarters ever, in fact. Capital expenditures investments SEK 1.1 billion, slightly on the low side. There is some seasonality in that. The guiding for the full year remains. We had a free cash flow of SEK 1.4 billion, which then brought the gearing down to 6%. We then move into the next slide with the EBIT bridge comparing Q1 to Q1. We have an improvement of almost SEK 700 million in profit compared to the same quarter last year. Prices is more or less neutral in the totality of prices and terms. We had negatives in the currencies, which offset the positive effect on the metal prices. The improvement in the result is mainly due to volumes and more specifically than higher grades in our mines, which has been mentioned earlier. In addition to the mines, we also had good free metals in smelters, and we had a positive internal profit in the quarter. Costs are slightly up, mainly due to inflation. Depreciation, there we have a connection between the depreciation of stripping and so on, which follows the production level of metals. With higher production of metals, we get higher depreciation. Finally, we had a fire in the Bergsöe plant, as we talked about in the last report. We've taken a charge to the P&L of SEK 50 million to reflect that equipment that was damaged in the fire. Comparing Q1 to Q4, it's a slightly lower result, minus SEK 187 million. Out of that, SEK 125 came from lower prices and terms. The main factor, in fact, then was a negative foreign exchange effect. We had lower U.S. dollar, and we had stronger EUR, which had a negative impact. Looking at the combination of volumes and cost altogether, it's more or less at the same level as the very strong Q4. Then we had, again, the write-down of all the equipment in Bergsöe. Moving into cash flow. SEK 1.4 billion. In the end of 2017, we had low inventory levels, and that situation has normalized. We've built inventories, and that gives a negative impact from working capital in the cash flow, adding up to SEK 1.4. Apart from that, slightly higher tax paid due to the strong result last year. I think the main thing here is that we have slightly higher inventory. Moving on to the balance sheet. You can see here we have on the chart at the side, we have seven consecutive quarters now of strengthened balance sheet. We're down to 6% gearing. Net debt is down to SEK 2.5 billion, and we have a financing that we're happy with. We have low funding costs, 1.2% interest rates, and a duration of 2.7 years. Payment capacity, very high, SEK 12.2 billion, which is stronger, as an effect of the expected dividend payments. That was a brief summary of the financials. Lennart, would you like to conclude?

Speaker 8: As always, we try to point out what happened in the first quarter, which is good to understand. Are there any extraordinary or unusual things to guide us going forward? If we start with Aitik, program is going very well. The other thing is it's going according to plan, you always have precautions or uncertainties, but I must say that the running in or commissioning at this point is going very well, so I have no problem whatsoever to report on. However, running up or commissioning or run-in of big equipment is always involving higher risk than going forward or an ongoing situation. The risks are not over of disturbances, but as far as I can say, I have nothing to be very nervous about. The guidance for grades in Aitik, we had the full-year guidance. We have had a very strong quarter in Q1, we have seen that we dare to tell that it's probably going to be a little bit better than we have said before in the rest of the year, in Q2 to Q4. The guidance is 0.26%, the guidance of 2019 is okay. Garpenberg, low zinc grades and high silver grades in Q1. I think this will probably normalize. In other words, you could probably expect some reverse on those quite unusual grade situations. The guidance for 2018 are unchanged, 24% 150 grams, 115 grams of silver. We had very good grades in Tara in Q1, be a bit careful with that one. The continues over the winter, I mentioned in the beginning, continued into . If you're a skier and you are in Scandinavia, it's an amazing skiing season also now. It's a lot of snow. It has also been a lot of snowfall, we have had some disturbances also in the second quarter, which is unusual. Nothing to be nervous about too much, still some disturbance. 2018 benchmark for zinc TC have not been settled yet, I'm sure we will have a lot of questions on it, we are sort of taking the profit and the zinc smelters in line with what we think will be the zinc TCs, we're not going to voice our opinion where that will be. That's the situation there. Positive internal profit elimination in Q1. That's a zero game, it's sometimes up and sometimes down. It was positive in Q1. The maintenance stops in the plant maintenance 2018 is only SEK 200 million compared to over SEK 400 last year. If last year was an exceptional heavy year, it's rather a quite light year compared to the long-term average. SEK 130 million will be in the second quarter. The CapEx guidance remains unchanged. I think the conclusion is very much what we have said before. We are in a situation where very good times for mining, where we are right now, is offset by not so good terms for the smelters going opposite direction. This gives us a more stable overcycle stability than most comparable companies. Base metals and precious metals also tend to go opposite directions and add to our stability, but also our synergies and our ability to take complex materials from external suppliers. We have the highest productivity in the world in Garpenberg and in Aitik. We have the AGM today at Garpenberg. We are going to have a lot of people going underground. We have with investments or the cost involved in an AGM on site. We have also had family days. We have had days for people living around here. We have had school classes from the towns from around the area here. We have done surveys on the school children or school class people 15 years old, and 72% answered on a survey after having been with us at Garpenberg that they would be interested to work as adults in our mines, which is a very exceptional number, I think. We're very pleased with that. Strong balance sheet. We see how tremendous our cash flow is right now, and the gearing is going very, very quickly to zero. High grades, stable smelter production, new crusher in Aitik under commissioning, and it's going well. I think that concludes our presentation. Now we are prepared to take questions. Yes, operator, please go ahead with the Q&A session.

Speaker 12: Thank you. The first question comes from the line of Alain Gabriel from Morgan Stanley. Please go ahead.

Speaker 1: Yes, good morning, ladies and gentlemen. Two questions from my side. Firstly, on the Aitik grades, Lennart, you mentioned that higher grades go hand in hand with lower throughput. How should we think about the throughput for the remainder of the year on Aitik? Does the higher grade profile in the remainder of the year mean that you're bringing forward higher grades from 2019? That's the first question. The second question is on the market terms that you mentioned in the smelting business. Have we seen the full negative impact of the weaker market terms in Q1, or will we see another step down in Q2? Thank you.

Speaker 8: Okay. On Aitik I think we will continue approximately as now to mine the lower parts which is very high grade. Of course, we will now commission and start seeing volumes from the top. We have a lot of ore there, big volumes and lower grades. We will sort of blend in lower grade material. I think the base, the scenario is higher volumes with the lower average grades, which is made up of the high grade stuff we're doing and then blend in more low grade material. Some of that material will probably be very low grade to compensate for the highs. We're going to see a normalizing grade situation at high volumes, we hope. Again, in the second quarter, I would say we are in a starting up period and the risks are there, and it's going to be a bit on/off. Volatility on both volumes and grades will remain in the second quarter. Thereafter, I think we're quickly coming into the guidance values and with the variations we may have in the second quarter. Nothing I necessarily believe will happen, but a probability which is there. The second question was about market terms. We have seen about half. We have inventories. When the year starts, we have inventory with the old terms. The new terms will start to hit or to impact us from the 1st of January deliveries. Now we get them delivered, and they will be sort of compensated or adjusted in retrospect. If we assume the right levels, which I think we do more or less, then we're probably seeing half of all, to get the ballpark picture, half of the volume of the smelters have been on inventories from last year and half from the new year. Yes, there will be an additional impact in the second quarter.

Speaker 1: Thank you.

Speaker 8: Thanks.

Speaker 12: The next question comes from the line of Liam Fitzpatrick from Deutsche Bank. Please go ahead.

Speaker 9: Morning. Two questions as well. Just wanted to push you a bit more on Aitik. I guess this year is going to be a ramp-up year, but are you willing to give us a throughput guidance or a range for 2019? Secondly, just on mining grades, Aitik you've explained, but we've also seen big variances versus your guidance at Garpenberg. I think Kevitsa was higher as well. Are you still comfortable with your full-year guidance at those mines? Are you able to give us guidance for zinc grades at Tara? Thank you.

Speaker 8: A lot of questions. Of course, I agree. We have had more variations in different mines from probably what is normal. Mining is such. We are in different areas. We have rock stability. Now I'm going back to the previous quarter rock stability problem. We have to redirect and probably going to lower grade areas sometimes. We go back, and then we take the high grade areas we planned in the first place. Of course, this is normal for any kind of mining. Variations are typical for mining, even though I have to admit that we have had a little bit more than normal, and certainly true for Aitik. What was your additional question?

Speaker 5: We had lower zinc grades than the full year guidance in Garpenberg. That was something we talked about in Q4. I expect that to continue a bit into Q2, but the full year guiding remains. Please also note that we had very high silver grades in Q1, and the full year guiding also remains there. Tara, also very high zinc grades. We expect that to normalize during the rest of the year, so that is nothing that I think you should plan to continue.

Speaker 8: In other words, in broad or in general, our guidance remain there. You had the additional question.

Speaker 9: It was just.

Speaker 8: Volume in Aitik. Let me come to it. You were asking about that. We have been sort of close to 40 or around, call it a little bit below 40, sometimes over, million tons a year, and we're going towards 45. One of the key elements is to get stability in the crushers. The new crusher is looking very good. I was there the other week. I was looking at the commissioning, and starting up. It's a workhorse with redundancy, which we didn't have in the previous surface crusher. We have basically two crushers in the same system, so we can maintain one when we operate the other. This has been a major bottleneck for us or the main bottleneck in the system for three years. I think that as soon as we're up running with two crushers in the second half of the year, we're going to be back on the good levels and moving towards the 45 million tons. How fast that will go and going into details, I'm not really interested today. I'm very excited about, and the focus is to get the commissioning going. It's going to plan.

Speaker 9: Okay. Thank you.

Speaker 12: The next question comes from the line of Jatinder Kaur from Citigroup. Please go ahead.

Speaker 6: Hi, good morning. Just a question on grades again. You're seen about a month into second quarter as well. At Garpenberg and Tara, do you expect-

Speaker 12: Jatinder?

Speaker 6: Yes.

Speaker 12: Jatinder, please bear with us. The speaker line has just disconnected.

Speaker 6: Okay.

Speaker 12: Please stand by. Thank you.

Speaker 6: Sure.

Speaker 11: We had a technical disruption, now we're on again. Please go ahead, Mr. Evrell and Gabrielsson.

Speaker 12: Jatinder, please go ahead with your question. Thank you.

Speaker 6: Thank you. Not sure what happened there. I'll start again. Just on grades, you have seen a month into the second quarter already. On Garpenberg and Tara, do you expect a reversion already into second quarter, or is it more of a 2H event when grades are going to more normalized territory? Thank you.

Speaker 8: I can take that if you want.

Speaker 5: I think Garpenberg, in fact, we came in slightly above what we expected in Q1. That means that in Q2, we will probably still mine below full year average, at least in the beginning. Tara, we expect a normalization from Q2, including Q2 then.

Speaker 8: Thank you.

Speaker 12: The next question comes from the line of Oskar Soderstrom from Kepler Cheuvreux. Please go ahead.

Speaker 13: Yes, good morning. Just coming back to Aitik and the crushers and the guidance. Can we view that you're giving this firm guidance quarter for quarter over the rest of 2018, that you are very confident in the commissioning of the new crusher station, that you dare to improve the guidance a little bit?

Speaker 8: The philosophy of guiding we have is that we don't normally guide on things which are on average grades or on a continuous or on a steady state kind of situation. Then we focus when we start up such a big thing we're doing in Aitik right now, then we narrow in and try to lead you as good as we can. The problem is, in the real situation is a bit volatile, which is absolutely normal when you start up an equipment of the kind. The precise guidance or the quarter by quarter guidance we will do when we think it is important for the market to understand what's going on. In a normal situation, I don't think you should do this as a trend towards more short-term guidance. We will do it, and we will continue to do it on a need to be kind of basis.

Speaker 5: I'm not sure. Maybe I misunderstood your question. The guiding of 0.756% is for the remainder of the year average. It's not each quarter factor that level.

Speaker 13: Yes. Okay. Thank you.

Speaker 12: The next question comes from the line of Christian Kopfer from Nordea. Please go ahead.

Speaker 2: Okay. Thanks, operator. Just a few follow-ups from my side. Sorry if you have already answered these questions. There has been a lot of disturbances on the line. Apologies for that in that case. Firstly, on the Tara volumes. Lennart, I think you mentioned that you had a lot of winter disturbances in Tara for Q1. What is the normal milled volumes for Tara, would you say, in a normal weather scenario?

Speaker 8: Weather scenarios at all in the underground mines. It's very unusual that we have, but this time it was because of people couldn't get out on the roads. They got 30 centimeters or 10 inches of snow in overnight and things up several days. I think the normal guidance is absolutely no problem with winter conditions, either winter or any month at all. We don't have any weather pattern in any of the underground mines, typically.

Speaker 2: Yes. If you just look in tons. Tara has, in my book, it has underperformed the last number of quarters. If you go back a couple of years, this mine has produced somewhere around 650,000 tons per quarter. Is 650,000 tons per quarter the right magnitude what Tara should perform?

Speaker 8: I think here you should look at a mine which was going to close by 2019, which has been extended and extended and extended. Of course, we are suffering from some old equipment which was planned to be depreciated, and we're now buying a little bit of an impact of previous plans. Now we are accelerating again. We have a longer life of mine plan, and we're seeing what's an addition. We have a lot of enthusiasm for Tara Deep. Even though we're not doing any drilling there, we're building the drift or the ramp into Tara Deep. I think the decline which you can see on the graph I showed before, it is a longer-term step-by-step in a negative direction. I think that will be over time reversed. It's a bit of the reasons why.

Speaker 2: All right. On SG&A cost, they have come up more than 20% here in Q1 versus Q4. I think it was SEK 260 million in Q1. Is there a special reason for this? Is this a level of SEK 260 on SG&A, is that also representative for the next couple of quarters?

Speaker 5: Let's see then. I think all in all, Q1 is representative when it comes to cost. That is the general comment. We had the only thing is the one-off adjustment connected to the fire in Bergsöe. Apart from that, I believe it's representative.

Speaker 2: The fire in Bergsöe, was that in SG&A or?

Speaker 5: No, it was not.

Speaker 2: Okay. Why did SG&A come up heavily then for the Q1 versus Q4?

Speaker 5: Let's see then.

Speaker 2: SEK 260 million in Q1, it was more than 20% higher than in Q4.

Speaker 5: Yeah. I think We have an extent of normal variations in the amounts.

Speaker 2: All right. Okay.

Speaker 5: I'm going to go into more detail than that.

Speaker 8: Listen, I think important is we are primarily following the entire cost development, and you have the cost bridges and you see we generally have very good control over inflation. We have a few %, and the variation between the lines is less relevant than looking at the cost breakdowns in the cost analysis or in the P&L analysis. I think, please follow that more or look at that which is more important, I think.

Speaker 2: Okay. Finally for me on CapEx, you have guided slightly above SEK 6 billion. If you look historically, you more or less always come in below that. If you look at the CapEx for this quarter, it was SEK 1.1 billion, which is far below. It's implying that you should come in far below. Are you speaking to this slightly above SEK 6 billion? Obviously, you are, how will you get there? CapEx should come up dramatically down for the next couple of quarters.

Speaker 5: I think you can say that we're always back heavy when it comes to CapEx.

Speaker 2: Right.

Speaker 5: During the summer season and the later part of the year, starting Q1. SEK 6 billion is a big amount. There are some operational challenges to deliver on that. They are important projects. A lot of it is maintenance CapEx, so that is something that we are working hard on achieving because not doing it would have a negative impact on production. We are slightly behind, that's correct. Plan is still to catch up during the remainder of the year.

Speaker 2: Okay. Thank you very much, guys.

Speaker 8: Thank you.

Speaker 12: The next question comes from the line of Gustaf Zetterholm from Pareto Securities. Please go ahead.

Speaker 4: Good morning. Just a follow-up question on the Q1 volume loss in Aitik. Can you quantify the loss due to the new crusher and how much is just normal seasonality? Following up on that, sorry again if this has been discussed, but I didn't really get your answer on the Q2 Aitik grades. Is it fair to assume continued high grades in Q2 and then declining in the second half of the year?

Speaker 8: We don't give guidance by quarter now. We say that the total of the three quarters will be higher than we said before, the 0.26. It's possible that we are seeing higher grades than the 0.26 in the second quarter, but that is most likely then related to lower than planned volumes again. We have a mix change. I think if you look at contained metal, it's probably, again, a less volatile parameter to look at in the commissioning stage we are in. For this winter conditions, how much should we take out of the winter? It was a quite heavy winter this year. We had a bit of disturbances, and it can be maybe 5% or 10% of volume in the first quarter compared to the average of the year. Of course, I think it is very volatile. Weather you can never talk about, it has been a quite big impact this year. It's quite bad weather year. It was also in the other open pit. The pits also were hit by weather conditions probably more than normal. If anything is normal with weather, by the way.

Speaker 4: All right. Thank you.

Speaker 12: The next question comes from the line of Johannes Goncalves from Handelsbanken. Please go ahead.

Speaker 7: Yes. Hello, everyone. It's Johannes here. My first question is also on Aitik. When you are ramping up now and execute on the crushing project, are there any extra costs involved, or is everything here capitalized as CapEx? Can you help me on that one, please?

Speaker 8: We have, of course, the operations are costing more. We have people on cleaning and so on. There is a different cost for commissioning. It's not big numbers on the project itself. Most was in the CapEx of last year. We of course are holding some equipment payments until commissioning and sort of all the test criteria that have to be met for final payments with the main suppliers. In the first quarter, basically everything was installed. We're holding some payments, and they're probably going to be paid in the second or third quarter. OpEx a little bit, CapEx, quite low period in the first quarter.

Speaker 7: Okay. Also on smelters, you showed us during the presentation, Lennart, investments in Finland, Terjärv, I think. I think you also have made recent investments in Odda. Will this have any sort of significant impact on the results for the upcoming quarters? Because it's been quite heavy investments done. Thanks.

Speaker 8: Yeah, basically what we're doing, we are increasing uptime. We're reducing unplanned small stops. We're doing some improvements in capacities, debottlenecking in some parts. Over time, yeah, we have expansion plans in particular in the mines. All the mines are in different kinds of expansion stages. Garpenberg, 3 million tons. Tara with the new sort of prolongation. Later on opportunities or potentials. I think we spoke about and so on. We spoke about last time the investments we're doing in Finland in both Harjavalta and in Kokkola. I think that in general, you have the picture of growing production without being too dramatic in of the units. In the smelters in particular, we are doing bottlenecking smaller projects, smaller improvements, which will increase the uptime. It's not going to change the picture but improvements.

Speaker 7: Okay. My last question is on the market terms for the smelters as you elaborated on the call here. Is the new terms fully in your P&L when it comes to the mining side? Lower TC obviously also means an uplift for your mines, obviously. Is everything reflected on the mining division here concerning this?

Speaker 8: Yeah. We apply the same thing in both, otherwise we would understate or overstate.

Speaker 7: Okay. Yeah.

Speaker 8: For example, in zinc, where we have a high degree of internal, if we have done something wrong with the TC assumptions, they are hitting one way and the mine, and the external part is relatively limited. Yes, same terms are applying both.

Speaker 7: Okay. Sounds good. Thank you very much.

Speaker 12: The next question comes from the line of Daniel Lös from Exane BNP Paribas. Please go ahead.

Speaker 3: Hi, good morning. Thanks very much for taking my questions. Just two quick ones. You highlighted in your presentation on copper, clearly benchmark or spot terms are currently below benchmark. Can you speak a bit about copper concentrate supply, how you see it at this point? Do you think that the current spot terms are reflective of tightness in the market? Maybe quickly some comments on copper scrap availability in Europe. Do you feel that there's increased competition by China for volumes? My second question, just quickly coming back on the benchmark terms, a quick follow-up. You outlined that your Q1 includes an assumption on your zinc benchmark TC, or where you expect the TC will settle, at least for the contracted volumes. Once the benchmark is settling, how does it work? Will you issue a restatement, or will this be done as part of the Q2 results? Thank you.

Speaker 8: Well, on copper TCs, I think in general, we do not forecast any TCs, and we don't want to involve in certainly where they're still open. I think that the terms are in copper well-known. In zinc, they are open, we don't want to comment on them too much. On the scrap availability, I think this is a real thing happening in the market with China and scrap. We have longer term agreements with some of the sources of scrap, we are not very affected by it at this point.

Speaker 5: On the last point, yes, we do a correction once the benchmark TCs are known. That will hit Q2 in that case.

Speaker 3: Great. Thank you.

Speaker 12: The next question comes from the line of Luke Nelson from J.P. Morgan. Please go ahead.

Speaker 10: Hi, guys. Just two questions from me. Firstly, a question on CapEx relating to your earlier comment about issues or potential issues deploying the SEK 6 billion as per guidance, but relative to potential impacts on production thereafter if you didn't achieve that. It'd be interesting if you just give us a bit more granularity on exactly how you're seeing any potential impact from not being able to deploy the CapEx this year, particularly from sort of 2019 and beyond perspective on mine plans and how you see that evolving. Second question from me, just on the internal profit adjustment, obviously a large positive there. Can you just give us a bit more color on the breakdown between the contribution from inventory and prices? Thank you.

Speaker 12: Ladies and gentlemen, please remain on the line. Thank you.

Speaker 8: Well, I'm sorry to say we had technical disruptions again. Please go ahead.

Speaker 10: Hello, can you hear me?

Speaker 8: Sorry for that. We were on CapEx of our guidance and what happens if and things like that. I think in general, we are in control of the CapEx. No problem, we will come back to somewhere of the guidance for the year. Suppose that it doesn't happen, well, that is not the scenario we look for. In that case, there are nothing critical that we are missing a maintenance stop and therefore have a new risk picture of equipment which have to produce one more year or something like that. The impact will then be several years later in increasing the dam heights or whatever, things like that, stripping in the open pits and things like that. We have plenty of time to do corrective actions, and I see no reason to be cautious about this. Again, I think we will be back on the CapEx terms. As you mentioned in the beginning, this is a typical seasonal pattern. A lot of suppliers are sending in a lot of bills, and it's a very hectic period in Q4, and then it's a little bit of a vacuum when you're into the first quarter. It's nothing very special about this.

Speaker 10: Sorry. Then it broke up there. There was a bit of static. The question on the internal profit adjustment, the contribution from inventory and pricing.

Speaker 12: Ladies and gentlemen, please continue to stand by. Thank you. Ladies and gentlemen, thank you for your patience. Please continue to stand by. The conference will resume shortly.

Speaker 8: Okay. A lot of problems with the lines, I think here. On internal profits, Håkan.

Speaker 5: We didn't quite hear the question. Just to give a figure with volumes, we are a little below average now when it comes to inventory volumes of internal stock. That might perhaps be an indication where we're heading going forward. Apart from that, I didn't quite hear the question, maybe you want to repeat it.

Speaker 8: Yeah. From what I understand, it was the last question, was it? Okay. We concluded this quarter. It was another strong quarter for Boliden. A difficult Q1 situation. We're going into the second quarter now with obviously spring weather, no problems with the open pits. We're going to have slower or lower maintenance than we normally do. We have a number of things related to grade variations, we have tried to guide you as good as possible. We have both sort of positive and some negative deviations on that one. It's my last quarterly presentation. I've done 42 now. I'm very thankful. It has been a privilege to work with Boliden and our shareholders. I thank you so much for a great number of years. Thank you very much.