Investmentidea: Boliden AB

Boliden operates six mining areas and five smelters in Sweden, Norway, Finland and Ireland. Boliden has a total of 5,500 employees and an annual turnover of approximately SEK 40 billion. Its shares are listed on NASDAQ Stockholm, segment Large Cap.

According to Boliden, the company creates stable and long-term value for its shareholders, employees, customers, suppliers and local communities. By providing resources and the efficient refining of the base and precious metals needed in society, which are recycled after use, Boliden is an important component of the circular economy.

Exploration and Mining

Meeting the demand for metals and securing Boliden's long-term growth requires extractable ore reserves, today and tomorrow. Exploration – the search for mineral deposits – is conducted both in the vicinity of existing mines and in new areas. Boliden's exploration focuses on deposits that contain zinc, copper and precious metals.

Boliden extracts ores from open-pit mines as well as underground mines. The ores extracted are transported to concentrators in the respective mining area, where they are processed into metal concentrates. The majority of zinc and copper concentrates are further refined into metals at Boliden's smelters. A certain volume of concentrates is sold to external customers.

Smelting and Market

Boliden's five smelters possess a high degree of process-technological expertise, flexible smelting processes and an ability to produce high-quality metals from complex mined concentrates and secondary raw materials. The smelters produce zinc ingots, copper cathodes, lead ingots and gold and silver granules, along with a number of by-products and small quantities of other metals.

The majority of Boliden's metals and other products are sold to industrial customers in Europe. Zinc is supplied to steel companies, amongst others, while copper is supplied to manufacturers of wire rod, copper rods and copper alloys. The automotive and construction industries are important end-consumers of base metals. Many of Boliden's byproducts are sold as raw materials to other industries.

Exploration successes in 2016

Boliden’s exploration work has yielded successes at Garpenberg and Tara. Large parts of Garpenberg’s mineral resources have been converted to reserves, while a new inferred mineral resource has also been announced at Tara. The exploration work at Kylylahti has not yielded any additional resources or reserves.

“The substantial upgrade from resources to reserves at Garpenberg, which is Boliden’s most profitable mine, and the extension of Tara’s lifespan, are particularly pleasing, of course. In Finland, Kevitsa has given us a new position in nickel, but the results of the exploration work at Kylylahti have been disappointing,” says Mikael Staffas, President Boliden Mines.

Exploration costs in 2016 reached SEK 380m (370m). Boliden’s strategy is to prioritize exploration work within existing mining areas, where geological conditions are favorable and the lead time from identification of a deposit to production is shorter than in conjunction with field exploration.

Currently, Boliden AB stocks quote at around SEK 260.00 and have a twelve-month target price of SEK 280.35 (Bloomberg). The trailing P/E-ratio of the last twelve months is 16.79. At Bloomberg, 6 analysts recommend to buy the stock, 14 to hold and 1 to sell.

Investors can leverage their Boliden-Trades with Vontobel Bull & Bear Certificates.