Boliden AB

STO:BOL

Earnings Call Transcript

[Olof Grenmark, executive]

Ladies and gentlemen, I'd like to welcome you to Boliden's Q1 2025 Results Presentation. My name is Olof Grenmark, and I'm Head of Investor Relations. Today, we will have a results presentation led by our President and CEO, Mikael Staffas, followed by our CFO, Håkan Gabrielsson. We will also have a Q&A session.

Mikael, welcome.

[Mikael Staffas, executive]

Thank you, Olof, and good seeing all of you. We are -- unless it's already clear to everybody, we are in Aitik today. We have a lovely day here with about minus 5 degrees and clear skies. And we are slowly approaching spring over here. The snow shield is maybe a little bit less than it was during winter, but we still have plenty of snow around. We will have later today the AGM here as well. So -- and then later this afternoon, we will also inaugurate the dam project, and I'll talk a little bit more about that one in a little while. So anyway, all of you, welcome this morning.

First of all, the highlights of the quarter. We had an operating profit of SEK 2.6 billion. In this, there has been a negative impact from the Finnish strikes of about SEK 100 million, very much in line with what we said when we talked about a quarter back. Free cash flow of negative SEK 1.8 billion or SEK 1.9 billion. Håkan will take you through some of those details. But in essence, we have built back some of the working capital that we very effectively or almost too effectively worked down in Q4.

We have lower recoveries and lower milled volume in Aitik. That is, though, however, very much in line or even slightly better than what we had in the press release that we released in early March.

The ramp-up of Tara has gone quite well, and it's going according to plan. The Odda has started the commissioning, and as those of you who attended, in either way or form, the Capital Markets Day, we have no update as such since then. The project is moving along according to plan.

We did make a directed share issue that was issued a few weeks back. We decided to make that directed issue when it was clear that we were going to get a closing of the Lundin deal sooner than we thought. And eventually, we got all the things clear, and we did close the deal last week on Wednesday. So given that we've had Easter holidays, I think it is today our second day of real kind of action into the asset as such.

Financial performance, as I said, SEK 2.6 billion in the quarter; free cash flow, negative SEK 1.9 billion; CapEx of SEK 2.9 billion. Håkan will come back and talk more about all these numbers.

The key projects, and this is, of course, very important for the future, and we have generally -- we are doing quite on plan compared to what we said before. The Odda expansion, there is no news. We're proceeding according to the plans that we had that we presented on the Capital Markets Day.

The Kristineberg expansion is going fine as well. We have had our first trial and the first loads up the underground trolley line. We are now working on getting this one fully commissioned, and we will inaugurate it in about a couple of weeks from now officially.

The Rönnskär cellhouse is also moving ahead according to project. And we will have the ramp-up there during the second half of '26.

The Boliden Area tailings sand recycling project is also well under well also for completion in the second half of 2026.

The Tara restart, ramp-up has worked very well. We are very well set for this year's target of 1.8 million tonnes, and we're moving on to then, in a couple of years, reach 2.2 million tonnes in Tara.

On the ESG side, it looks here like the emission gas -- greenhouse gas emissions are slightly up, which they are year-on-year, but they are moving according to plan. So there's nothing really much to talk about that.

We had a relatively good quarter in terms of injuries. We have come down a step. It doesn't mean that this is, in any way, an easy ride, and we've had some nasty near misses in the quarter that has, once again, put even more focus from our side on the issue of safety.

Sick leave, going a little bit the wrong way. I think this is in line with what we've seen quite a lot in Sweden and Finland over this winter where the influenzas and the colds have had a relatively larger spread than usual.

Market side and market development. This is, of course, something that we can talk a lot about. It's, of course, first, we need to talk about what happened in the quarter and then maybe separately about what happened after the quarter. But in the quarter, we've had a good development generally, especially of the base metals, so the metal prices. We did have already, during the quarter, a slight downturn in the dollar, which affected us negatively. But all in all, it was a relatively good market terms throughout the quarter. And you can also see on this long run that this was on a higher level than really been seen before.

Then after the quarter, and you see this on the slide here with the second white line, which is after the release of the quarter. Then both metal prices and especially the dollar has continued to weaken. And of course, the overall situation has weakened since the end of the quarter. However, having said that, we're still on a relatively good level so far. Who knows how the things will develop from here? We'll come back a little bit and talk about this when we talk about the outlook.

If we then start looking at what's happening in the industry, we can say that in copper, this line you see here is the price line at the end of the quarter. But even as if we look today, we will still have a healthy copper market with prices well above marginal costs. You see marginal cost for most mines going down. This is mainly the effect of lower TCs.

Then on the zinc side, you also see prices going down. Lower TC is helping here. And still even though the margin is less, a relatively healthy margin as well.

And then if we look at nickel and this is nothing new that we have a situation where the prices are well down in the cost curves, and it's very difficult to make money producing nickel.

If we then go back and look at ourselves and look at our mine production, Aitik, well, it's, of course, a disappointment compared to last year, but it's still slightly higher than what we had guided for. The diorite intrusion is, of course, the issue that we are struggling with and that we're fighting with. And then we have the oxidized ore. The oxidized ore will go away faster. And Liikavaara is now up in full production, which is on a positive side in Aitik.

In Garpenberg, we had a strong production, but we did have lower grades. We did alert to this during the Capital Markets Day that we would have lower zinc grades. Silver grades were quite according to the annual guiding.

In the Kevitsa, we also had a stable production. The milled volume just under the permit level that we have there.

Boliden Area, of course, is an area that's, right now, feeling very well from high gold prices, but we also had a strong performance in terms of the mining activities there, and we had a higher milled volume than in both our comparison periods.

And Tara, we've had the ramp-up going very well in the quarter.

On the smelter side, we started off the year in a pretty tough situation. We ran into a problem with the feed, especially on the copper side. That improved during the quarter. And when you add the thing up, we finished relatively well, but there was a challenging concentrate situation, both for Rönnskär and for Harjavalta.

It's also important here to point out, and I'll just say it here as an extra note that some people have, this morning, made a big thing about the fact that we have lower sales. That is in such just a very big success because in the smelters, where we have a lot of gold that's going through when we operated Rönnskär with the tank house, this was a very good raw material strategy because we got free gold. When you don't have a tank house, that is not such a smart raw material theory because you end up paying for gold that you cannot recover and the economics are much worse.

We have managed to turn around our raw material supply in a substantial way. Gold production is down a lot. That is good. It's not a bad thing. It's a good thing. And even with the high gold prices, that is a good thing. And of course, the challenge will be, and we are working on that, that as we -- towards the end of next year, it starts getting full production again through the tank house to then kind of get back to our kind of ideal raw material mix in that situation.

I should say, Harjavalta and Kokkola both had -- were impacted by strikes. Kokkola did have an unplanned maintenance in the roaster, but apart from that, good production as well. And in Odda, we are now ramping up production from relatively low level, and it's come a little bit up. There's quite a lot more still to be done.

With that, I'll give it over to you, Håkan, to talk a little bit about the financial summary.

[Håkan Gabrielsson, executive]

Thank you, Mikael, and good morning. So financially, I think you've seen the numbers. We report an EBIT excluding -- or an operating profit excluding process inventories of SEK 2.6 billion. That is substantially up compared to the same quarter last year, and it's down compared to Q4, which was a strong quarter, but also very much boosted by insurance income.

Operating profits including process inventories were SEK 3.1 billion -- SEK 3.062 billion. So we did have a positive process inventory, and not least gold, there's a significant part gold in our process inventories.

Investments, SEK 2.9 billion. No changes in investment plans there, so according to expectations. Free cash flow, negative SEK 1.9 billion. Working capital, I'll come back to that. And that adds up then to earnings per share of just shy of SEK 8.

Looking at the numbers by business area. We have a mining business area delivering a result of SEK 1.3 billion, which is up compared to both comparisons. And smelters at just above SEK 1 billion, again, up compared to the same quarter last year, but down compared to Q4, which was boosted by insurance income, a positive contribution from releasing internal profits as well.

If we then dive into some more details about the movements between quarters. Year-on-year, as you can see here, we've had a very good ride on metal prices. So compared to the same quarter, 1 year back, we had SEK 1.3 billion positive price impact. And that during the quarter is mainly metal prices and some currency. On the downside in there, there is also some lower premiums in TCs, but the good development on metal prices are more significant. I think we had about SEK 400 million positive from gold and about SEK 200 million each from silver, copper and zinc.

Also, volumes are up just over SEK 600 million. In this bridge, when we have restarted Tara, you will see Tara contributing to the volumes, but also having a part of the higher cost. But Tara is a big part of the volume increase, about SEK 500 million out of the SEK 637 million. We have on the negative side, as Mikael talked about, lower production in Aitik due to the diorite intrusion.

Harjavalta was a unit that delivered a strong result in the quarter. And if you recall, first quarter last year was quite heavily impacted by strikes and winter conditions and strikes not least in Harjavalta.

Costs are up. Tara is a very significant part of this increase, and then there is some inflation, relatively low level, but still some in there. You can also see that depreciation is increasing a little bit. We have started to depreciate the Aitik dam, and also depreciation in Tara are increasing as production is -- has been resumed. We have not yet started to depreciate the new asset in Odda in a significant way. That will come.

Quarter-on-quarter, fairly small change on the prices and terms, negative SEK 200 million, and that's mainly an impact from lower treatment charges, where we've had the full effect in mines and about half of the quarter on new terms in smelters.

Volumes are down compared to a fairly strong comparison period. We've talked about the issues in Aitik, which was a significant part here. We've talked about the lower grades in Garpenberg, which also played a significant part, and then strikes came out pretty much as we talked about in connection to the Q4 report, an impact of about SEK 100 million. This has partly been offset then by stronger production in the underground mines, not least Tara, which has -- which is in the process of ramping up the production.

Costs are significantly lower. We had an expensive Q4. We see a decrease in both business areas, a little bit bigger decrease in smelters. We have significantly lower cost for subcontractors. And we also had an expensive Q4 in that we had a strong finish of that year. So we had to increase the provisions for profit sharing and similar, which drove up the cost in Q4.

And then, of course, comparing these quarters, we have a significant -- we had a significant one-off in Q4 with SEK 935 million insurance income reported.

Cash flow. I think we have talked about most of these components, but it's -- the big one here is, of course, working capital, minus SEK 2.4 billion. We have a seasonality -- a clear seasonality where we tie capital in Q1. We did so also this quarter. You may ask, why don't we see that last year? Last year, however, was not really a normal quarter because we had strikes in Finland in harbors, and that meant that the inventories didn't really behave as they normally do.

CapEx coming down compared to the comparison period. Financial items, paid tax, I think, are roughly in line with what you would have expected. So adding up to a negative cash flow of SEK 1.9 million.

Then moving into the capital structure. It's a strong balance sheet and a robust financing. I should add that the bridge loan connected to the acquisition of Somincor and Zinkgruvan is not included in the payment capacity, but we do have a net debt-to-equity ratio of 13% following an equity raise. We have a net debt of just shy of SEK 9 billion, and we have a payment capacity of 18%, and you'll see the full impact of the transaction in Q2.

So with that, Mikael, if you want to carry on.

[Mikael Staffas, executive]

Thank you, Håkan. Just a few things about some forward-looking statements. First of all, welcome to Somincor and Zinkgruvan. It's been, of course, long talked about and long in the making. We're very happy that we could close this deal last week. We have put some position into place. But of course, as you know, in this business is going to be very much business as usual for these 2 mines for the next few quarters until we manage to get our planning cycle synced and everything else coming into play.

Now looking at the outlook going forward, this one might require a little bit more discussion than normally. Number one, what is new here is that we are guiding for Zinkgruvan and for Somincor. We're doing that in a different format than from the rest of our mines because we have basically taken Lundin's way of guiding and put that into place. And those of you who looked at Lundin will feel that these numbers are familiar, even though they're a little bit changed in different direction. They basically reflect the budgets as they lay for the units that we have taken over, not much of what we have added or subtracted to it, given that we have been in control of these assets for about 2 business days as of today.

The next thing that's important for this one is that we have no changes to the full year guidance here in any place. We are repeating the guidance for grades that we have in here and so on. We are making aware, which we said before, that there will be, in Q2, a one-off due to the deal-contingent advisory fees connected to the deal with Lundin. We are also pointing out, which we said before, that we have a big maintenance quarter coming up in the smelters for Q2. And then we are reiterating throughputs for Aitik and for Tara.

What is a little bit new here is maybe that we are guiding that the Q2 grades in Garpenberg will be lower than the annual grades, but we're not changing the annual grade. That means that we will get that back towards the second half of the year. What has happened here is that there are a few high-grade stopes that we have had to reschedule to move over until after the summer. So we will have that in place.

And then it's also maybe worth reminding that, of course, where prices and terms will turn out, we do not know. Everything will move, and it's a little bit of a situation there that things move around very quickly. There will be a definitive price effect on this given that the prices will stay where they are today. We should also be remembered when you come into the Q2 around this.

So with that, operator, I think we'll open up the floor for questions. So operator?

[Operator]

[Operator Instructions] The next question comes from Adrian Gilani from ABG Sundal Collier.

[Adrian Gilani Göransson, analyst]

I have few questions. I guess, first of all, on the newly closed acquisition because previously, you -- when asked about any potential operational improvements in Zinkgruvan and Neves-Corvo, you've said that you can't really comment before the deal is closed. So now that it is closed, can you provide anything on that front for now?

[Mikael Staffas, executive]

Of course, we will be looking into that, and we'll come back with guiding and guiding according to our style maybe next quarter or so as we've gotten our arms around this, and we also start being able to look into the mine plans in much more detail.

But just to be very clear, the big important part here, how to create value is around how to make sure that we increase the life length of these mines. They are, as you know, today, 9-year assets, both of them. So exploration will be an important part, but also how we work on productivity. But also to be relatively clear, and that's why we've chosen to just continue with the Lundin guiding so far for this year is that, of course, these things take quite some time to effect in an operations like mining.

[Adrian Gilani Göransson, analyst]

Okay. That's understood. So -- and then also in the EBIT bridge, the treatment charges contributed roughly negative SEK 200 million quarter-over-quarter. How much of the EBIT hit from lower benchmark terms is sort of left to take in Q2? Should we expect a similar impact in the Q2 bridge as well?

[Håkan Gabrielsson, executive]

You should expect an additional impact of SEK 300 million. So we had roughly half of the quarter, for smelters, feeding material with last year's prices. And then in mining, we get the full impact from day 1 of the year. So an additional SEK 300 million is what I should expect for Q2.

[Adrian Gilani Göransson, analyst]

Okay. That's very clear. And the final one, you mention that Q4 was a particularly expensive quarter and costs were now down roughly SEK 600 million. For the coming quarters, would you say the Q1 cost base is more indicative of the situation going forward if we exclude the 2 new mines, that is?

[Håkan Gabrielsson, executive]

Well, when it comes to those variable parts like profit sharing and so on, that depends on the price development going forward. But the best advice, I think, I can give is look at the history and look at the seasonality because we are talking about the Q3 that is slightly lower than the others, but we also typically have higher costs in Q4 and fairly low in Q1. So look at the cyclicality.

But we don't see any major inflation at this case. It's -- we have the salary agreements that have been concluded for Sweden and Finland, which are public information. And then the inflation on the remaining purchases is fairly low.

[Operator]

The next question comes from Liam Fitzpatrick from Deutsche Bank.

[Liam Fitzpatrick, analyst]

I just wanted to come back to Somincor and Zinkgruvan in terms of the guidance because the CapEx and the production, from what I can tell, looks a little bit different to Lundin. So on the CapEx side in terms of sustaining CapEx, I think it had been indicated annualized at sub SEK 1.5 billion. Based on what you've told us today, it looks more like around SEK 2 billion annualized. So any color on that difference would be helpful.

And then on production, I understand you're still getting your arms around these assets. But last year, Lundin had guided that Somincor zinc output in '25, '26 would be moving up to around 140,000, 150,000 tonnes of zinc, which is quite a bit higher than the annualized figure you're giving us today. So can you help us explain that? And should we think about these production and CapEx levels that you're giving us as indicative for what these assets will do in 2026?

And then separately, a quick follow-up on the sales volume point. I noticed that the zinc sales were quite a bit lower than production. Is that purely timing? Or does that relate to inventory build in the system for the Odda expansion?

[Håkan Gabrielsson, executive]

Should I start with the inventory or...

[Mikael Staffas, executive]

You can start with the inventory.

[Håkan Gabrielsson, executive]

Yes. So that is mainly a timing matter between production and sales. We had a little bit higher inventories in the mining business area at quarter end, and then it's also a reflection of the situation in the last quarter and so to speak. So there is not really any sizable part of inventory build connected to Odda yet.

And when it comes to the guidance?

[Mikael Staffas, executive]

Well, just to be very clear, and I don't really want to point too much finger to those previous owners, but what we have guided here today is in line with the internal budgets that are laying for these 2 assets. So we have not changed them in any major way. We have not done any changes nor would it really be possible to do any change at this time.

I think that regarding the sustaining CapEx, I mean, the CapEx that we're guiding here for is not 100% just sustaining. There is some replacement CapEx in that as well. Don't ask me for the exact number, but it's -- you didn't -- there are some, what I would call, normal replacement schedule as well for this year in these assets.

[Liam Fitzpatrick, analyst]

Okay. Could I quickly follow up on the -- Håkan, on your point around no inventory build yet for Odda. Does that indicate we should expect some sort of WIP inventory build as we move through the second half?

[Håkan Gabrielsson, executive]

Absolutely. I mean the impact in general on the zinc smelter is clearly less than what it would have been on a copper smelter. But as we ramp up the production, there will be slightly more working capital as well.

[Operator]

The next question comes from Marina Calero from RBC Capital Markets.

[Marina Calero Ródenas, analyst]

I have a couple of questions from my side. First, on the new assets. You have provided us today with some clarity on the outlook for this year. Can you comment on how -- on synergies that you're expecting to receive from the timing for those?

And then the second question is on the smelters cost. It looks like they've been down quarter-on-quarter. How should we think about that for the coming quarters this year?

[Mikael Staffas, executive]

Regarding the synergies, this is an interesting topic that we could spend lots of time on. You have to remember that some of the synergies are already in the number because some of the synergies that we talked about along the value chain are -- through this deal, we have cemented or we have made longevity of some synergies that were already in place between these 2 assets in our smelting division that now becomes internal. Maybe they can also be improved, but we'll have to get back to that once we've got more arms around it.

The other synergies around how could we potentially operate these assets better than the previous owner, given that we do have a stronger or at least bigger technical expertise around, we'll have to come back to. We will come back and guide to that once we get our arms around the total mine plan and what we can be doing around that.

So sorry for that, not too much information. Regarding the smelter cost, Håkan, you can do that because that's also part of this relatively elevated cost in Q4, right?

[Håkan Gabrielsson, executive]

Yes, exactly. And as I alluded to earlier, we had quite high personnel costs, and we had quite high cost for subcontractors in Q4. And the personnel cost was related to lifting provisions for profit sharing and similar. We have a scheme for all employees covered by that. I don't expect any such costs in Q2. But then again, you never know where prices turn out. We always do adjusted forecast.

Then apart from that, Q4 is typically an expensive quarter. Q2 is more normalized. What we will have in any Q2 is a fairly high maintenance cost. And for smelters, that is included in the number that we have guided for. Part of that is lost revenue. A part of that is cost.

On the mining side, maintenance is more evenly distributed between quarters, but I know that Q2 will be a fairly heavy maintenance quarter also in mines. So you should expect perhaps some maintenance costs there. But all in all, we're not seeing much inflation. And in that sense, I think Q1 is fairly normal if you take normal seasonality into account for both business areas.

[Operator]

The next question comes from Amos Fletcher from Barclays.

[Amos Fletcher, analyst]

A couple of questions. I just wanted to ask on internal profit elimination, this was the second quarter where we had quite a big beat on the back of higher-than-expected elimination. Can you just talk about the drivers behind that and what we should expect in future quarters?

[Håkan Gabrielsson, executive]

Well, the drivers behind that is basically twofold. There is -- one is the internal -- the volume of the internal inventories that varies over time depending on the balance of production between our mines and our smelters. So we'll see that coming up.

Otherwise, higher metal prices means that we make more money in mines, and then you get -- we get a bigger negative internal profit elimination when prices are falling, like we've seen after the quarter end. That typically means that we can release some of the internal profit elimination. So where we stand today, I'd say that the price component is -- if I just take today's spot prices, the price component would be about SEK 50 million, SEK 60 million, SEK 70 million positive on the internal profit. But then again, we'll have to see where prices end up.

[Amos Fletcher, analyst]

Okay. And then I wanted to ask on working capital. Obviously, quite a big build in the quarter. Can you just discuss how normalized current working capital levels are? And will there be any one-off impact from the Lundin acquisition?

[Håkan Gabrielsson, executive]

Well, the Lundin acquisition will consolidate 2 new units, so that will bring in that working capital. But the bulk of our working capital is in the smelting side. And we've already had -- this acquisition will not change the smelters feed and production and working capital build. So you should assume a fairly limited impact from those.

Where we stand right now, we typically are on a pretty normal level this time. We'll go into a maintenance period, which has an impact, and then we will release working capital during the second half of the year.

[Amos Fletcher, analyst]

Okay. And then the final one I just wanted to ask was on Aitik. Can you provide any guidance on how the recovery profile is likely to move through the course of this year?

[Mikael Staffas, executive]

The recovery profile is likely to improve, maybe not in Q2, but going from Q3 and Q4, we will be coming already by that time through the most oxidized part of the ore that we are mining here. So that one is -- whereas the diorite issue will remain until the end of the year as guided.

[Operator]

The next question comes from Ioannis Masvoulas from Morgan Stanley.

[Ioannis Masvoulas, analyst]

The first one is for Håkan. Going back to the treatment charges. When I look at your sensitivities and I assume that half of the new benchmark for copper and zinc is baked into your numbers for Q1. I'm getting a potential incremental impact in Q2, maybe at around SEK 170 million or SEK 200 million, and you're talking about SEK 300 million. So could you just clarify how much of the new benchmark you've taken in Q1 and why SEK 300 million comes through Q2?

[Håkan Gabrielsson, executive]

Yes. Well, we've taken roughly half of it, and I'll have to go back and check the sensitivities. It has been a bit more difficult than regularly because the benchmarks haven't really been clear as we went into the quarter end.

But when I did the math to look at the shipments that we have, we've taken about half of the volume in -- with new prices in Q1. You can see that in smelters in the EBIT bridge. You have a negative impact of SEK 300 million compared to the previous quarters. We have the timing issue here that on a full year basis, we have a positive impact on mines and a negative impact on smelters.

But in this particular quarter, we get the mining impact from day 1. So that's a 100% mining positive impact in Q1 from lower TCs, but the negative impact is only when you start feeding material that has been procured with 2025 terms. So that means basically half a quarter impact in Q1.

So when looking at Q2, my expectation for that reason is SEK 300 million. I did the math, and I arrived at SEK 280 million or something like that and took the liberty of rounding that up.

[Ioannis Masvoulas, analyst]

Okay. That's very helpful. Second question on Aitik. You talked about the fact that you should be out of the oxide zone perhaps, I guess, in the second half. And it sounds like you're more confident on the diorite being an issue isolated to 2025. Is that incremental sort of confidence you got post the Capital Markets Day? And I think at the CMD, you talked about potential mitigating measures. Is there anything you're looking at, at Aitik? Or you think going into 2026, both oxide and diorite issues should be behind us?

[Mikael Staffas, executive]

Oxide should be behind us pretty clearly. So that's one I'm not worried about. The diorite, there is still an issue. The diorite will be around, but we are taking mitigating aspects around this. We're changing drilling pattern. We're using stronger blasts. We are looking into pebble crushing and improving pebble crushing and so on. That's why we feel relatively confident that we should be able to get our arms around this and have a less impact of this when we come to '26 than we're having in '25, even though the diorites will still geologically be present even for next year. But we'll get back to this guiding once we've gotten our arms more around it.

[Ioannis Masvoulas, analyst]

Very clear. And maybe last one on Garpenberg, you talked about the zinc grade being lower than the full year average in Q2. Shall we expect something similar to Q1 or even worse?

[Mikael Staffas, executive]

Similar to Q1 is maybe a good thing or maybe slightly better, but still worse than the annual average.

[Operator]

The next question comes from Christian Kopfer from Handelsbanken.

[Christian Kopfer, analyst]

Two follow-ups from my side. Firstly, for Somincor, sorry for maybe not understanding it fully when you talked about it. But if I look at the most recent guidance from the previous owners, it seems like you are drastically lower on zinc and on copper as well. So is that primarily driven by milled ore volumes or lower grades?

[Mikael Staffas, executive]

I can take it. It's primarily -- as far as I know, even though I'm not an expert on this, but I guess it's primarily driven by lower throughput.

[Christian Kopfer, analyst]

And why is throughput suddenly so much lower?

[Mikael Staffas, executive]

I don't think it's suddenly so much lower. I think it is higher even maybe than what they had last year, but it might not be as high as was hoped for.

[Christian Kopfer, analyst]

Okay. So you expect to -- so when you did the due diligence, when you bought it, you expected throughput to come back to original guidance for 2026?

[Mikael Staffas, executive]

No. And that's an important point, Christian. Now we can talk a little bit more freely about that because these numbers that we're guiding for now is already in line with the budgets. We had not seen the budgets because they were not done, but of course, we had looked at the business plan. This is very much in line with our business case. So we are in no way surprised when we got to see the real budgets here a few days back. They were quite aligned. So this is not worse. And we have had a business case for Somincor specifically in our buildup of the business case, which is less aggressive than, I think, the previous owners had guided for or alerted for -- to -- for the external market.

[Christian Kopfer, analyst]

Okay. And maybe if you are more open on this, when you did the acquisition price analysis from your perspective, did you include more reserves?

[Mikael Staffas, executive]

There are some resource conversion in the valuation. I don't want to go into details on that. But yes, we have included some resource conversion. Now that is, as you know, important as you move forward for valuation, but if we look at an NPV point of view, it is still 10 years out and maybe not so prevalent.

[Christian Kopfer, analyst]

Okay. And then finally for me on smelters. So did I understand you right there, Mikael, when you -- that you said that we shouldn't expect any, call it, tailwind for the next couple of quarters on the smelters driven by higher gold and silver output?

[Mikael Staffas, executive]

Yes, you understood me right in the sense that we should not expect that from Rönnskär. This is, of course, a highly kind of sensitive thing and how to handle this because Harjavalta has a very good capability of handling gold. And we're, of course, trying to move in gold-rich concentrates into Harjavalta and gold-poor concentrates into Rönnskär. Doing these things with all the other kind of boundary conditions that you have, including energy balance and other kind of penalty element is not an easy one.

But coming back to your question, I think that it's probably prudent to say that until we have the new tank house in place, we are not going to get much more tailwind from better free metals in terms of volume. Then, of course, we still have quite a lot of free metals in terms of -- they're in there. And of course, if gold prices go even further north, we will get the benefit from that.

[Operator]

The next question comes from Daniel Major from UBS.

[Daniel Major, analyst]

Just another one on the Neves-Corvo, and I appreciate you've made it pretty clear the guidance previously provided by Lundin was a bit more optimistic, and that's a driver. But if we focus more on the normalized run rate of the asset beyond the guidance you've inherited or the budget you've inherited for this year, is it fair to assume that the optimal configuration of the asset is perhaps a lower throughput run rate than the milling capacity, particularly in the zinc circuit going forward, and therefore, 100,000 tonnes broadly plus or minus is a more normalized run rate for Neves-Corvo?

[Mikael Staffas, executive]

We'll answer this one in a very high level and saying that, yes, you're probably right that the optimal way of running or the plausible way of running Somincor is probably at a slower throughput also going forward than has previously been announced. Exactly what that gives in terms of tonnes of zinc, I'm very happy to come back to you later.

[Daniel Major, analyst]

Okay. And then on the previous guidance you provided, SEK 300 million to SEK 350 million EBITDA contribution from the Lundin assets, is that based on the assumptions we see today or Lundin's previous guidance? And what other macro assumptions are embedded in that?

[Mikael Staffas, executive]

Based on our own estimated production, so it's decoupled from what Lundin has ever said externally. It is our own production estimates that we had during the due diligence phase. The price deck that was used to come to those numbers were consensus numbers around the fall. I don't think that we have an exact source for that. But if you look at what you would have seen consensus numbers being shown in the kind of October to November time frame, those will be the kind of numbers that were in there in terms of the metal prices.

[Daniel Major, analyst]

Okay. And then just a second one, looking at the sensitivity analysis on Page 23 of your release, that's excluding the acquired assets. With particular reference to the currency sensitivity, can you give us any high-level indication of how that would be grossed up to include the new assets on the euro/dollar and the euro/SEK?

[Mikael Staffas, executive]

I'm looking at my CFO.

[Håkan Gabrielsson, executive]

Yes. Well, we'll have to come back with an updated table. But essentially, all the revenues that we're talking about is dollars, and then you have the Somincor assets where the full cost is euro based and the Zinkgruvan one with the cost base in SEK essentially.

So I can't give a number yet on the quarterly sensitivity, but we'll come back to that next year. But simply, I mean, the full revenue is dollars, and then you have one mine with a cost base in euro and another one with a cost base in SEK. And you've got the cash cost in the guidance, so maybe you can work back to that. But we'll make sure to include it for Q2.

[Daniel Major, analyst]

Okay. So you'll update the table next quarter on a 12-month forward basis?

[Håkan Gabrielsson, executive]

Absolutely, yes.

[Operator]

The next question comes from Cody Hayden from Berenberg.

[Cody Hayden, analyst]

Just 2 very quick ones. I guess, first, Garpenberg on the zinc grade. I know you mentioned that you expect Q2 to be slightly better than Q1. But how should we think about zinc grade in Q3 and Q4 as you kind of work towards getting back to '25 guidance [ of 20% ]?

And then secondly, could you maybe just briefly [indiscernible] impact the business?

[Mikael Staffas, executive]

I lost you fully on the second question. On the first one, I could just say that in order for us to get the full year guidance, you need to have the kind of appropriate positive deviation on grades in Qs 4 and -- 3 and 4 to get up to the total for the year. Exactly how that splits between 3 and 4, we will not comment on here.

Maybe you can try to repeat the second question, see if I can hear it better.

[Cody Hayden, analyst]

Yes. Sorry about that. Just on the second question, just around kind of tariffs and potential impact on the business. Any kind of update you could provide there?

[Mikael Staffas, executive]

Okay. That's another one that we can talk many hours about. But just to be very clear, we sell almost nothing to the U.S. We have had -- if you look at the last year, we said a little bit of sulfuric acid there. That's all spot based. We can sell it somewhere else. So in that sense, we're not impacted at all.

We do not regularly buy any kind of raw materials from the U.S. So in terms of retaliatory potential tariffs, we should not be that affected. We are -- it's not a lot of money, but it's some money. We are buying mining equipment from the U.S. And interesting enough, some of those suppliers have indicated price increases because they have to pay tariffs on the parts that come from Mexico into the U.S. Whether it will be like that or not, who knows? It's still a small number, but it's kind of a fun and interesting kind of consequence of this.

Our big impact from tariffs is a secondary impact. What has to do, what happens to base metal prices, what happens to precious metal prices and what happens to the currency, those are the big effects. It's so far of this new kind of situation during April, it has moved negative for us. Where that's going to end up, who knows?

[Operator]

[Operator Instructions] The next question comes from Ola Soedermark from Kepler Cheuvreux.

[Ola Soedermark, analyst]

Just a follow-up on Tara and the ramp-up. Regarding the ramp-up with increasing costs and how the timing of shipments is filtering through the P&L during the quarter, are there any mismatch there? Or is it a normalized level and equalized kind of timing between the cost and the shipments?

[Mikael Staffas, executive]

I would say that we have a good match. I mean it's never perfect, but we were ramped up already by January 1. So we kind of had some concentrate already in the pipeline building up the kind of -- they're relatively short, but still somewhat existing inventory until we ship.

[Ola Soedermark, analyst]

Okay. And a follow-up on the recoveries at Aitik. I think I've never seen such low recovery rate at Aitik. And you say it's going to last for 1 quarter. It's going to improve gradually during the second quarter.

[Mikael Staffas, executive]

I would say that it's going to last in the second quarter and improve gradually in the second half.

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Mikael Staffas, executive]

Well, thank you, operator, and thank you, everybody out there. It's been good talking to you, and it feels good to be talking about these results.

I will just end on a kind of a more curious note for all of you around there. Those of you with sharp eyes, you will have noticed this already, that if you look at the logo that you see down on the slide here to the right and if you look at other places, we are not anymore having a new in our logo. We've changed the logo. It's in connection with the Somincor and Zinkgruvan acquisitions. This is a time to kind of make those kind of decisions. We will, however, not spend any money on that of any kind of significance. We're giving ourselves 5 years to get rid of the new everywhere. So we should be able to fit that with normal budgets and no special budgets for changing any signs anywhere.

That's the Boliden way of doing things that once you change, you do it so it doesn't really cost much, and you do it when you have to do some kind of decisions anyway.

With that, I wish you all a very happy day and a good spring. Thank you all.