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2010-02-12Boliden AB 1
Bildplatshållare
Full Year ReportJanuary – December 2009
Lennart EvrellPresident & CEO
Johan FantCFO
The Market
Fourth Quarter 2009Higher demand for base metals
– Slow increase from EU customers – Significant increase in metal prices– China continues to drive global
demandBut - Higher prices and stocks increase price risk
Full Year 2009Strong recovery from difficult 2008Overall decline in demand:
– Significant decline in mature economies
– Growth in China Lower average prices vs 2008 but strong increase from troughStronger USD and Euro vs SEK
0
20
40
60
80
100
120
140
2008 2009
USD/SEK
Zinc
2010-02-12Boliden AB 22
Boliden
Full Year 2009Revenues MSEK 27,635 (30,987)EBIT excl. PIR* MSEK 2,350 (1,793)
– Operating profit MSEK 3,623 (1,004)Stable production – Mines offset reductions in smelter volumesReduced costs and prudent capex
Fourth Quarter 2009Revenues MSEK 8,356 (6,287)EBIT excl PIR* MSEK 870 (211)
– Operating profit MSEK 1,232 (-491)Cash Flow MSEK 350 (-534)Lower metal grades in MinesStable production and higher metal prices improve Smelters resultsAitik expansion on plan
*Operating profit excluding effects from Process Inventory Revaluation
2010-02-12Boliden AB 33
Group EBIT development
-500
0
500
1000
1500
2000
2500
Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
MSEK
Quarterly EBIT
Quarterly EBIT excl PIR*
* EBIT excl Process Inventory Revaluation
2010-02-12Boliden AB 4
The Market
2010-02-12Boliden AB 5
Industrial production gradually improving
Industrial production growth
Eurozone (Seas. adj.) - ManufacturingJapan (Seas. adj.) - Manufacturing
USA (Seas. adj.) - ManufacturingChina (value added) - total industry
Source: Reuters EcoWin
05 06 07 08 09
Yea
r ove
r yea
r %
-40
-30
-20
-10
0
10
20
30
Mature countries – improving from low levelsChina – growth accelerated through the year
2010-02-12Boliden AB 66
Zinc prices increased through 2009 –downward correction beginning 2010
Zinc price (LME average)
USD/tQ4-09 vs period
Q4 08 1,189 + 86%
Q1 09 1,174 + 88%
Q2 09 1,476 + 50%
Q3 09 1,757 + 26%
Q4 09 2,211 -
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000USD/t
0
100
200
300
400
500
600
700
800
900Stocks kt
Stocks Daily price Quarter average price
2003 2004 2005 2006 2007 2008 2009
Source: Reuters Ecowin
Increased mine productionPrices and stocks continued to increase
2010-02-12Boliden AB 77
Spot TC up, premia stable - market slowly better
Zinc metal price premium
-
50
100
150
200
250
300
350
400USD/t
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
Spot TC increased further, still below realised contract levelsStable TC into 2010 but higher escalator triggers = downward pressure on realised TCsSpot premiums stable, somewhat higher in Europe in Q4
2010-02-12Boliden AB 88
Boliden AB 2010-02-129
Copper prices increased through 2009 –downward correction beginning 2010
9
Copper price (LME average)
USD/tQ4-09 vs period
Q4 08 3,940 + 69%
Q1 09 3,435 + 93%
Q2 09 4,676 + 42%
Q3 09 5,840 + 14%
Q4 09 6,643 -
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
10 000USD/t
0
100
200
300
400
500
600
700
800
900
1 000Stocks kt
Stocks Daily price Quarter average price
2003 2004 2005 2006 2007 2008 2009
Source: Reuters Ecowin
Copper hedges in 2010 at 7,606 USD per tonneCovering 65% of volume in 2010
Copper spot TC fell in Q4 – premia firming with cautious optimism in market
Copper treatment charge
0
20
40
60
80
100
120
USD/t of concentrate
TC spot China buying terms TC benchmark
Source: CRU
2006 2007 2008 2009
Copper metal price premium
0
40
80
120
160
200USD/t
Spot Copper premium CIF W. Europe Benchmark CIF EuropeSource: CRU, Brook Hunt
2005 2006 2007 2008 2009
Indicated benchmark TC 2010 46/4,6Benchmark 2010 premium similar to 2009 at 80 USD per tonneSulphuric acid market improved
2010-02-12Boliden AB 1010
Lead, silver and gold increased
Very strong price trend for lead through the year. Fundamentals weak – pressure on premiaSilver & Gold – strong price development
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500USD/t
0
20
40
60
80
100
120
140
160
180
200Stocks kt
Stocks Daily price Quarter average price
2003 2004 2005 2006 2007 2008 2009
Source: Reuters Ecowin
Lead
0
200
400
600
800
1 000
1 200
1 400USD/t
Daily price Quarter average price 2003 2004 2005 2006 2007 2008 2009
Source: Reuters Ecowin
0,0
5,0
10,0
15,0
20,0
25,0USD/t
Daily price Quarter average price
2003 2004 2005 2006 2007 2008 2009
Source: Reuters Ecowin
Gold
Silver
2010-02-12Boliden AB 1111
Boliden AB 12
Business Area Mines
2010-02-12
Mines - production
Low head grades in Q4Copper milled ore lower than Q3New mill in TaraAitik on plan
0
200
400
600
800
1,000
1,200
1,400
1,600
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 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
0
1,000
2,000
3,000
4,000
5,000
6,000
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 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
2010-02-12Boliden AB 13
Mines - financial summary
0
200
400
600
800
1000
1200
Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
MSEK
Quarterly EBIT
MSEK2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
Revenues 6,509 5,178 1,997 1,949 1,109 1,013 1,490 1,163 1,671 1,357EBIT 2,159 734 949 876 303 115 793 466 76 -40
CAPEX 4,435 3,886 692 454 264 237 157 344 338 305Whereof Aitik Expansion 2,982 2,540
TaraBA Mines Aitik GarpenbergBoliden
Overall good full year performance in MinesHigher prices did not fully compensate for volume losses in Q4
2010-02-12Boliden AB 14Boliden AB 2010-02-1214
Ore Reserves &Mineral Resources
2010-02-12Boliden AB 15
Ore Reserves and Mineral Resources - Summary
Positive development in 2009 in spite of exploration cutbacksExploration results gave net additions in Aitik, Garpenberg and Boliden areaTara quantities largely replacedExploration activities increased in Q4 2009
2010-02-12Boliden AB 16
Increasing ore reserves and mineral resources in most mines
02 000
4 0006 0008 000
10 00012 000
14 00016 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Kton
0
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Kton
0
5 000
10 000
15 000
20 000
25 000
30 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Kton
0
5 000
10 000
15 000
20 000
25 000
30 000
2002 2003 2004 2005 2006 2007 2008 2009
Kton
Boliden Area
Garpenberg
Aitik
Tara
Ore production*10Proven/probable Measured/Indicated
2010-02-12Boliden AB 17
AITIK copper mine expansion Project fundamentals
Double ore production– High productivity– Profitable mining of lower grades
Lower grades– Cu production +50%– Current production plan has lower than
average grades 2011-17
Increased ore reserves 2009– Life of mine extended to 2029 (2026)– Average grade 0,25 (0,27)– Salmijärvi deposit upgraded to reserve
Capex and time– 6,1 bSEK capex – Start 1 April 2010
2010-02-12Boliden AB 1818
AITIK – copper mine expansionProject status
Mine production – expansion on planConcentrator – Cold tests finalizedConveyor system – Being commissioned
Project on plan
2010-02-12Boliden AB 1919
AITIK production areas
67
2014
Feb 2010
2010-02-12Boliden AB 20
AITIK production areas
S1
S2
Salmijärvi
5
6
7
crushercrusher
crusher
New ConcentratorPB6 waste 2010-2014
S1 main production area
2010-2014
PB5 depletedend 2010
2010-02-12Boliden AB 21
Aitik - varying ore head grade (indicative only)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 20290
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
Ore production Ore reserve grade Indicative ore head grade
Reserve grade 0,25%
Ore production
2010-02-12Boliden AB 22
Business Area Smelters
2010-02-12Boliden AB 23
Smelters - production
Copper Metal production -4% vs Q4 but 12% up vs Q3Copper production reduced
0
50,000
100,000
150,000
200,000
250,000
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
Zinc feed, tonnes
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Zinc metal prod, tonnes
Zinc feed, total Zinc metal production
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 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
Zinc Metal production +7 % vs Q4 and +3% vs Q3 Full production in the quarter. Very good production in Kokkola
2010-02-12Boliden AB 24
Smelters - financial summary
-500
-300
-100
100
300
500
700
900
1100
1300
Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
MSEK
Quarterly EBIT
Quarterly EBIT excl PIR*
MSEK2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
Revenues 26,765 31,256 1,669 1,882 1,261 1,432 632 760 1,979 1,848 1,123 1,200EBIT 1,724 372 83 395 24 64 91 127 362 469 6 210EBIT excl PIR 451 1,162 83 395 -117 191 91 127 362 469 6 210
CAPEX 480 737 199 192 148 225 12 12 99 162 22 146
OddaRönnskär Harjavalta KokkolaBergsöeBA Smelters
Zinc smelters on full productionImproved volumes gave strong Q4Copper smelters hit by poor market conditions
25
2010-02-12Boliden AB 25
Financials
2010-02-12Boliden AB 26
Financial summary
MSEK Q4 09 Q4 08 YTD 09 YTD 08Revenues 8,356 6,287 27,635 30,987Operating profit (EBIT) 1,232 -491 3,623 1,004EBIT margin 15% -8% 13% 3%
EBIT excl Process Inventory Revaluation 870 211 2,350 1,793
Free cash flow 350 -534 -948 837
Capex 1,269 1,533 4,915 4,624
Earnings per share, SEK 3.00 -1.65 9.14 3.42
Gearing 46% 39%
27
2010-02-12Boliden AB 27
Group EBIT Q4 2009versus Q4 2008 and Q3 2009
MSEK Q4 2009 Q4 2008 Q3 2009EBIT 1,232 -491 949Process Inventory Revaluation 362 -702 215EBIT excl Process Inventory Revaluation 870 211 734
Deviation 659 136Specification of deviation:Volume -210 -30Costs -40 -256Prices & Terms 1,251 431
Metal prices and terms 1,256 463
Realised Metal- Currency hedge -246 -104
TC/RC terms 194 70
Premiums -30 -3
Definitive pricing (MAMA) 77 5
Currency effects -337 -21whereof translation effects -23 7
Others -5 12Deviation 659 136
Specification of hedges and MAMARealised Metal-, Currency hedge -72 174 32Definitive pricing (MAMA) 19 -58 14
Lower grades in Aitik and higher production in Smelters
28
Boliden AB 2010-02-1228
Cu +14 %Zn +26 %
Volume effect inzincsmelters Exploration Vacations in Q3Variable pay increased
Zn price escalators
Group EBIT YTD 2009versus YTD 2008
MSEK 2009 2008EBIT 3,623 1,004Process Inventory revaluation 1,273 -789EBIT excl Process Inventory Revaluation
2,350 1,793
Deviation 557Specification of deviation:Volume -292Costs 194Prices & Terms -367
Metal prices and terms -929
Realised Metal- Currency hedge 592
TC/RC terms 243
Premiums -284
Definitive pricing (MAMA) 11
Currency effects 1,062whereof translation effects 55
Others -40Deviation 557
Specification of hedges and MAMARealised Metal-, Currency hedge 243 -349Definitive pricing (MAMA) 30 19
Average Cu down - 26%
Average Zn down -11%
29
Boliden AB 2010-02-1229
Higher spot sales
Costs in local currency down -2%
Average USD/SEK up 16%
Realized Zinc TCs
Capital structure
GearingSEK bnUnless otherwise stated
31 Dec2009
31 Dec 2008
Total Asset 33.3 30.3
Capital employed 26.2 24.7
Shareholders' equity1 16.3 16.1
Net debt 7.4 6.3
Gearing % 46 39
Equity/asset ratio, % 49 53
Average maturity in years 3.8 4.8
Average interest rate, % 2.62 5.18
Interest duration, years 2.1 0.2
Liquidity reserves2 6.9 8.3
39%
52%55%
48% 46%
0%
10%
20%
30%
40%
50%
60%
Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
1. Shareholders’ equity includes the value of outstanding hedge contracts
2. Defined as unutilised credit lines and cash less outstanding commercial papers 30
2010-02-12Boliden AB 30
Sensitivity analysis
Estimate of the 12-month effect on Group EBIT on 31 December 2009, based on planned production volumes. Effects of hedging, contracted TC/RC or stock exposures are not taken into account.
Changein metalprices,+10%
EBITeffect, SEK m
Change inUSD, +10%
EBITeffect, SEK m
Change inTC/RC,+10%
EBITeffect,SEK m
Zinc 665 USD/SEK 985 TC Zn 70
Copper 485 EUR/USD 480 TC/RC Cu 55
Lead 120 USD/NOK 120 TC Pb -15
Gold 110
Silver 95
2010-02-12Boliden AB 3131
Adjusted financial goals
Boliden operates in a cyclical and capital-intensive industry. Good profitability and financial stability are prerequisites for sustainable growth and long-term value creation. It is in accordance with these criteria that Boliden’s Financial goals for the net debt/equity ratio and dividend have been adjusted, while the goal for the return on capital remains unchanged.
These changes have been made with a view to achieving increased clarity as well as to bring the goals into line with the preconditions in the mining and metals industry
The return on capital employed shall exceed 10 per cent over a business cycleThe net debt/equity ratio in an economic expansion phase shall not exceed 20 per cent in order to maintain a reasonable level of financialpreparedness during an economic recessionThe dividend shall correspond to approximately one third of the net profit
2010-02-12Boliden AB 3232
Going forward
Industrial demand increased through 2009Aitik expansion starts 1 April 2010 Aitik head grades lower than average after 2011Increasing exploration activitiesCu smelters under difficult conditions
– Reduced production continues
Capex impacted by phase out of Aitik expansion but also higher investments in other units
2010-02-12Boliden AB 33
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 effect on 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 otherthird parties.
2010-02-12Boliden AB 34
Boliden produces metals that make modern life work