Gruvaktiebolaget Viscaria (VISC) Earnings Call Transcript

Warmly welcome, everybody, to Viscaria's quarterly report for the second quarter of 2026 up here in Kairana. And as usual, we welcome you to our core shed, where actually everything starts, as you know, and Ross will tell you more about that later on. Viscaria continues to deliver according to plan, and activities are now higher than ever across all work streams. We are continuing to build our organization. We are adding additional contractors. And we now have approximately 200 people who are logging into the site every day, 7 days a week, and more people for every month will then come in. We connected ourselves to the main railway on June 17, which was an important event, and we will inaugurate the entire rail yard, the Leyardi rail yard, on October 14 this year. That means that after that date, we will start to get equipment via train and not only just trucks after that. We are continuing with the commissioning of the water treatment plant in a successful way, and Charlotte will give you much more detailed information about that. And after the period as well, we contracted Sandvik for underground production equipment, which is an important statement that we're now just about ready to start our production. Ross will talk a lot about the continued successful drill results, which prove that this deposit continues to increase in both tonnage and grades at a very fast pace. We had a very well-attended Capital Markets Day and AGM up here in Kairana on May 7 with some 250 guests and shareholders, which was very well received. Then, of course, we concluded a very successful, oversubscribed direct share issue of some SEK 1.7 billion, where we also took the opportunity to convert all outstanding shareholders' loans of a bit less than SEK 700 million. So the total size of the issue was then SEK 2.4 billion. We're extremely happy with the continued support from basically all our institutional shareholders and also the largest private shareholders, where many of them took the opportunity to increase their shareholding. At the same time, we're also very pleased to welcome our new second-largest shareholder, the French Infrastructure Fund, Infraigia, supported by the French state, an experienced fund investing in mining and metals that has been scrutinized as well for a long time and now has entered our cap table, and we're very pleased with that. Lastly, we are in the final stage of concluding our debt financing of approximately SEK 5 billion. We're pushing that a bit from September, as we have previously announced, a bit into October. There are no red flags that is behind this push. It's just that it's a complex project financing, but a completely standard format. So the mandated lead arrangers, SocGen and ING, are now in the final stage of deciding on the bank consortium, the syndication consortium that will participate. So that means that another 4 to 6 banks are then included in all these arrangements. And we also are then negotiating with 2 governmental bodies to receive credit guarantees for part of the amount, and that is the Finnish state via [indiscernible] and the German state Oil via Oil RMS. The reason for the credit guarantees is, of course, that we are buying so much equipment from Finland that the Finnish state is supporting. And we are exporting part of the copper concentrate to Germany, which the German state is supporting. So again, Charlotte, Ross and Frida will talk in detail about all activities that are happening both during the quarter and activities that will come. I will take the opportunity to share with you a few slides just about why we care so much about details and tidiness of our site. So as you have heard before, we care about the design of our buildings, the color scheme of our buildings and has nothing to do that we want to do a fancy site. This is about caring and quality. We care about details. When you care about details, your organization noticed that. This is to prevent accidents and support quality. It shows that you are not just pushing the project into production at any cost. You do it at a site that is nice to come to every day. Our main office, which many of you have seen when you have attended here at Capital Markets Days before, we are now doing this nice little park, which will be a very welcoming face every morning when you come to work. That comes with the fact that you come to work with a bit of smile at your face. We have also constructed the Vescaria Village. So this is the overnight facilities, the accommodations for the building constructors during the 2-year period that we now have left to build out site. So this is not for future production mine workers. This is only for the construction workers during the construction period. We have 132 overnight rooms here. And since we work in 77 shifts, that means that we give opportunity for overnight facilities for 264 people that we then release the burden on the Kairana municipality to have them for hotel rooms, or that they buy up apartments or houses for the contractors. We have them now here on site as well. So after 2 years, the red buildings here will either be converted to contractor offices or will be moved away. But the field here in between with the football feed and barbecue places, outdoor sauna, outdoor gym, that will be forever for our workers for recreation, mornings, lunch breaks, afternoons or evenings. And the brown house there down at the end of the picture, that will also be there forever because that is the change facilities and also lunch rooms and so on for the daily production workers that comes into site to work in the mine on a daily basis. We are also, next year, doing a nice visitor center just outside the main gate where we can receive guests, have security reviews, and provide information. You can see films about the site and production and so on. And this will also give a very nice welcoming feeling when it come to our site. So we're super proud of all this work as well that we do. But over then to details about what's happening in the site, and I start with welcoming Charlotte to the stage. Thank you.

Thank you so much, Jorgen. So I will now give you an update on where we are with the project and the execution of the project. And overall, the project is proceeding really well. We are actually on our most critical construction project, the processing plant were a little bit ahead of schedule, which will give us a big advantage now when we're moving into the winter months. Other than that, we have a strong focus on time planning in the project, the quality of the designs that we receive every day and also on safety, of course, which is a top priority for us all across sites. We're also doing the final detailed designs within the project and adding to that, the last big contract for CapEx investments that will secure us to do a safe and successful restart of the Viscaria mine. Looking at the processing plant. As I said, the project is going as planned, and we're currently ahead of schedule. The engineering and construction activities has intensified a lot during the quarter, and there's more and more contractors coming in helping to construct this building. Metso is also undertaking the detailed design of the process equipment that will be inside the processing plant based on the basic engineering that they completed in December last year. We're also doing continued process optimization work, including further metallurgical studies just to be ready, fully, fully ready when we're actually starting up this processing plant in '28. And as we go, we're also scaling up the operational organization. The picture you see here that's taking from yesterday. So yes, it's moving fast in the project. Adding to that, this is a time lapse movie showing the progress in this construction over the last 3 weeks. So the building is erected quite fast because everyone knows what to do. It's tidy and with a strong focus on safety. So we're not only constructing the building, we're also doing the concrete foundations for the heavy equipment, such as the mills and also the foundations for the building. So looking into the mine, we've done 300 meters of underground rehabilitation as of now, and it's going well according to expected, actually a little bit faster than expected. We're doing roughly 25 meters per day. And this picture is taking also yesterday from inside of the mine entrance. We have started the open pit operations. So now we're blasting material that we use for our tailings construction, and we also have some ore that we have started to stockpile on the ROM pad. As Jorgen mentioned, we have selected Sandvik for the underground mining fleet. We're happy with that. And they're also going to help with maintenance service of the equipment and, of course, automation. We're also doing optimizations of the mine plan and one improvement that we've done lately is that we're going to start the development to the upper part of the D zone before taking the lower part just so we can start in a month by doing that. Also, another positive from doing that is that we decouple the mine plan and progress from the dewatering rate. And not by saying that, the water treatment is going as planned, but this is an optimation that we wanted to do, and it has a lot of benefits. So looking on the infrastructure and logistics side, the Levi rail yard, our railyard station, so to say, it was connected to Malbanan in 17th of June, which was an important milestone for us. It's not easy to get those slots, and we signed up to have this slot 20th of April 2023. So that just shows how well we planned for doing this and how we actually executed everything in order to be able to do it this exact date. The railway yard is well in construction and the concentrate storage building, adding to that, inauguration will be held mid-October. And the Nordic infrastructure for the boat shipment is also well in progress, power to site and site infrastructure. Looking at the tailings facility, it's in full construction as well. You see the picture here. And we're also building the clarification pond and the outlet from the clarification pond that will take water into the processing plant. And a positive here is that we are blasting our material from the open pit, and we're not only using that for the support benches. We also do our fine filters, the darker filters in the picture and the coarse filters. So it's a really good CapEx profile of our tailings facility. So going to the VTP000. We are well in commissioning now. The picture you see here is the water that we discharge to the recipient. So we're now treating the water of metals, uranium and sulfate and everything is going as expected, and we meet the permit limits. So we're discharging to recipient according to plan. So now the focus is the ramp-up of this discharge amount to reach 1,000. We are soon there, and we are operating training ongoing. So super important to learn how to run this facility in a good and efficient way. And we have our drinking facility completed and approved by the authorities, so we can support the site with drinking water as well. So here's a picture zooming out a bit, the pipeline that's going from the VTP000 and the outlet to the recipient that zoomed in on the picture to the left. And here's also a picture from the inside, [Tidilan] and the sulfate treatment step in the middle; that was the last thing we added that was completed in mid-June. And the Viscaria Village, as Jørgen mentioned, it's nearing commissioning. Our first guest will arrive the 24th of August, which we are very happy about, which will give our contractors a nice place to stay and rest when they're not working and the official inauguration will be in September. So it's 132 rooms and 264 residents that we can take. So very close to taking that into operations. Lastly, from my end, the project schedule, no changes. The sulfur treatment was in place in time, the exact date. And then we could start the dewatering of the mine, and that will continue as we go. Underground, we have liftation, which is continuing doing that as we dewater, open pit operations ongoing as planned. And underground mining, we will actually start in a month when we start with this drive and development to the upper part of the D zone. Power installation will be completed in '27, rail yard October this year and the tailings area and clarification pond will be completed later this year. Looking at the processing plant, it will be weatherproof and all the foundations will be completed in November this year. And then we're moving over to installation of process equipment, which will be done during '27. And then we do commissioning as we go ramp up and then have our first sellable contract in the first half year of '28. And with that, I will hand over to Ross for the latest from exploration.

Thank you very much, Charlotte, and good morning to everybody watching. It's very exciting to be back with another exploration update from the team here at Viscaria. Stepping back, we're really starting to see the different parts of this geological story come together, and that's a theme that I want to carry through today's presentation. Our standout result from this quarter comes from the D Zone, where drill hole 25013E, which was drilled 800 meters outside of the existing resource boundary, intersected 10 meters at 2.2% copper, which is more than twice the current average grade of the deposit. Elsewhere in the B Zone, drilling is continuing to find high-grade extensions to the mineralization and also define an exceptionally thick package of mineralized rock. And finally, our reflection seismic survey is now underway on site, which is allowing us to test the system at an entirely different scale than ever before. But first, let's focus on that standout result from the D Zone. So this image we see here, I think it's one that we're all starting to become a bit familiar with. What we see is the D Zone resource color-coded according to grade by thickness. It's where we have the hotter colors; that's where we have the thicker and higher-grade parts of the deposit. Over the past year, we've been progressively stepping out in our drilling further from the resource. During the last quarter, we presented the results from hole 24036, which was our first major step-out hole, 400 meters from the resource, and this returned an intersection of 14.3 meters at 1% copper. And the results from this are what encouraged us to go even further. Last quarter, we also presented 25013E, which intersected copper-iron mineralization 800 meters from the resource. At that time, we didn't have the assay results, but now we do. 10.2 meters at 2.2% copper and 32% iron. This is just a fantastic result. But what comes with this result is 2 important messages. Firstly, the scale. So with this Soho, we've opened up a significant corridor between the intersection and the current resource. And that's a corridor that has great potential for further resource growth through continued drilling. In fact, we're already starting to test this space with 2 active drill rigs in the field, and so we're hoping to have results to share very shortly from there. On top of the scale, another important message here is, of course, the grade. So as we're moving further away from the resource from the known mineralization, it's very important that we're seeing that the mineralization is not weakening. We're not finding lower grade. In fact, quite the opposite: more than double the grade of the current resource. On top of these 2 important messages, we also see a very interesting mineralogical observation as well. In this area, we're seeing an increased proportion of bornite coupled with hematite alteration. Now it's quite early doors, but in similar copper systems, this type of observation bornite with hematite, it can indicate that you're vectoring towards a higher-grade part of the system. So of course, this is a very interesting thing that we're going to follow along and try to find in the next drill holes as well. But let's have a look at the drill core to try and connect this headline intersection to the geology. So what we see here is photos of the drill core overlaid by the individual assay results. What I really like about this result is the consistency of the grade. So as you can see, there's not just one narrow but super high-grade vein that's carrying the intersection. Rather, what we see is several consecutive samples, 2% copper and several actually around the 3% mark as well. So this is genuinely high-grade mineralization in an area that we believe has great potential for resource growth and, at a later stage, future mining expansion as well. But importantly, this exploration campaign is continuing to deliver great results, not only from one zone. We can also take a look at the D zone as well. So again, a familiar image. This is the B Zone resource, again, color coded by grade thickness. And we can see in the southwest portion of the deposit on the left-hand side of this image, there's a gap in the resource. And that was previously untested until basically the last year, when we started to fill that gap. The first result we had was drill hole 25013B, which returned a whopping 76 meters at around 1% copper. Then in the last quarter, we presented hole 13B, which, again, confirms a really thick package of mineralized rock with several stacked high-grade intervals above 1% copper as well. And that brings us to today, where we have 2 new drilling results to share with you. We just took the drill hole 25013E in the B zone, but this same hole had great success drilling in the B zone as well, returning an intersection of 20.6 meters at 1.13% copper and providing an extremely important link between that shallow part of the resource and the deeper drilling that we've completed. Then finally, we have drill hole 13F as well, which has also confirmed this really broad mineralized package. A total intersection of 270 meters at 0.5% copper with several higher-grade sections within that, including 14.3 meters at above 1% copper. But importantly, the key message from the B Zone drilling here, it's not about any one individual result. It's the repetition, the continuity. Here, we're seeing geological and grade continuity beyond the resource. And from the project perspective, this is really important. It's real near-mine exploration. So these are results adjacent to existing resources and adjacent to the planned mining infrastructure as well. Now this is quite a technical slide, but I think it's really important to show how the different pieces of the puzzle are starting to come together. In this image, we're seeing a plan view, so a map of the Viscaria deposit looking down. And in the backdrop of that is Magnesaluric's geophysical data. What we see in the data is this red trend, the strong conductivity, and this comes from the graphitic crops in the A Zone and the C Zone. If we follow this strong conductivity signal towards the southwest part of the deposit, you can see that there's this major break cutting across the formations. And the geology that we observed in that break tells us exactly why this is the case. In this area, the original black carbon-rich rocks have been completely bleached and altered by the hydrothermal fluids, losing that formational conductivity. And in the same area, we see an abundance of these cross-cutting feeder style gains as well. So we think it's no coincidence that along that same trend, that's exactly where we've made a lot of our recent discoveries. First, the Ava zone, then B Zone Deep, the first high grades in the C zone, and now today, this 800-meter strike extension in the D zone, 10 meters at 2.2%. All of this is to say that the geological and geophysical evidence is all pointing towards a major feeder corridor in this part of the deposit. So today, of course, we've been focused a bit on the near-mine drilling results. But with the reflection seismic survey underway on site, we can now start to look far beyond the drill bit. As we learn more about the Viscaria deposit, we start to ask ourselves bigger questions about the architecture and the depth extent of the deposit. And with seismic, we can start to answer a lot of those questions. This is part of a project in collaboration with Uppsala University and Bits now. And you can see on this map, it's quite an ambitious scope for the work that's planned. Not only do we plan to cover the entire mine site with seismic profiles, but we also plan to do some profiles in the city as well. And that's in order to chase the down-dip reflections southeastward from the deposit. But the work is now underway. So let's take a quick look to see how this actually works in practice. We have here the seismic source, this vibrakthrough truck, and it systematically works along each of these profiles, lowering this base plate and generating seismic waves, which reflect back from different geological features in the subsurface and are recorded by thousands of receivers that we have over the area. But of course, the really interesting part is when we get the results back, and we can start to see how this fits in with the overall picture. So finally, to try and tie this together and look ahead to the future. What we see on this chart is the growth of the Skyz mineral resources through time from 3 million tonnes when the mine closed in the late '90s, up to 108 million tonnes, which were defined in 2025. As you see today, all of the near-mine drilling results are pointing towards continued resource growth. But what's really important is that as we move closer to production, we need to acknowledge that exploration is about much more than just adding tonnage. Our near-mine exploration campaign is really targeting areas that have great potential to add scale, flexibility in scheduling, and optionality to the future mining operation. In other words, we're drilling in areas that can make a big difference. We have 4 active drill rigs working in the area, and our planned resource update is for Q1 2027. So until then, we will continue to keep compiling all the data and to confirm geological continuity in all these exploration spaces. The key message today, though, is that we're not just accumulating single drill results. This is all becoming part of a comprehensive understanding of the Viscaria mineral system and where the greatest value might sit. [indiscernible], quarter after quarter, we're really starting to put together this geological story. So thank you very much for listening. On that note, I will hand over to Frida.

Thank you for that, Ross. Then I will go through the financial performance in summary for quarter 2, 2026. If we start with the income statement, we have a big portion of the capitalized expenses related to exploration assets. It's SEK 127 million. We have an operating profit of minus SEK 24 million, and we have the net profit of minus SEK 41 million. It's a little bit higher negative result than the previous year, mainly due to interest expenses referring to the shareholder loans. We have a positive cash flow for the period, SEK 346 million, and that includes the first out of 2 tranches from the directed share issue. If we then look at the balance sheet, we have an increase in the cost of exploration and evaluation assets. It's almost SEK 2.1 billion. Of course, we have a large increase in the ongoing development. It's almost SEK 1.6 billion, mainly due to the ongoing ramp-up of construction activities. We have cash and cash equivalents of SEK 1.3 billion, and our equity is now SEK 3.8 billion at the end of quarter 2 '26. We have definitely further strengthened our financial position during this oversubscribed new share issue, which adds SEK 1.7 billion in cash to our company. We also got in InfraVia as a new second-largest shareholder. And the tranche 2 of the share issue was completed after quarter-end, and add in that all of our shareholder loan of SEK 681 million was fully converted into shares, which means that we actually are now debt-free, except for a really small portion from Norlandondan. So this means that the total equity raise was SEK 2.4 billion. And when we now have executed the equity raise, we are working towards the debt financing of approximately SEK 5 billion. We are well underway there and aiming for a financial close in October this year. This is fully aligned with our plans and according to the financial requirements. Included in the financing requirements, we, of course, have different kinds of margins in our calculation. In all of our CapEx, we have a contingency post of a range between 10% and 15%. And on top of that, we have this cost overrun facility, which is approximately SEK 800 million, which is also included. If we're then turning to the market upside, we see here some sensitivity analysis of our earnings. In the first row, you can see our business case is based on an average copper price during the whole life of mine of $11,700. That will give us an EBIT of SEK 1.6 billion during our steady-state years, which is from 2029 until 2036. If you then use the spot price of today, approximately USD 14,250 per tonne, you see that we have a significant increase in EBIT of over 40%; it will rise up to SEK 2.2 billion instead. If you use the bullish forecast of USD 20,000 per tonne, you can see that the EBIT goes up more than 100%, actually up to SEK 3.6 billion during this year, if all the other parameters stay the same. The key message here is really to see that all of these different kinds of copper price scenarios are fully reasonable due to the market conditions, the availability of the supply, and also the long lead time for the possibility to increase capacity on the mining side. This slide also shows our business case, but from the cash flow perspective, you see the first year, 2026 to 2028, we are in this CapEx and investment phase. But already in 2029, we turn cash flow positive. And if you follow the line in the diagram, you see that we become cash flow positive in the accumulated already 2032. And we have an overall payback in approximately 4 years. So if I then try to summarize really shortly from the financing perspective, we have strengthened the equity base materially. We have removed all of our shareholder loans. We maintained a really strong cash position during this last directed issue, and we are now heading towards financing close on the debt side in October this year. So by that, I leave the word back to Jorgen again.

Thank you, Charlotte, Ross and Frida for your presentations. Viscaris is uniquely positioned for successful mine opening and first delivery of copper in 2028. We are blessed with a fantastic deposit and site. And as you can hear, with significant growth quarter-by-quarter. I think it's important, when I say this, to underline that our exploration drilling is not the kind of an exploration company's exploration drilling. Our exploration drilling is carefully planned together with our mine planning team. So we know that these resources that we aim to increase can easily be converted to reserves and successful economic mining. We are not an exploration company that is pitching for the sell side. This is a mine company where we focus on economic mining and increasing the economic mining parts of the deposit. We have an extremely supportive cap table as well, which supports the success of this project. And not least, we have a great management team and Board. And this fantastic picture is our entire Board and most of our management team on Tuesday this week when we held the Board meeting for the second quarter. It's a great atmosphere. I can guarantee you that, and you can see that in the picture. So with this picture still on the screen, I would like to welcome Charlotte to support me in the Q&A session today. Thank you.

Thank you, Jørgen. So fantastic to hear about all the progress on site. You have many parallel processes. Which one would you say is the most crucial right now?

I mean, it's definitely the construction of the processing plant. As you know, this is our single largest capital expenditure, almost SEK 3 billion. A lot of people, contractors, firms are involved in this; logistics to get all the material on the right day and the right time to get everything to site. But as I said before, we have a fantastic, well-structured organization. We're super pleased with our different contractors, Nordic and Metso, that are heavily involved, but also other subcontractors in the construction of that. But that is the largest challenge just now.

And you also seem to be a bit ahead of plan on that. But if I'm reading you rightly, you're also a bit behind schedule on dewatering, are you? And does that affect the time plan?

No, it does not affect the time plan. Commissioning has taken longer than we thought in the beginning. And you know that the main reason for that is that we found sulfides deeper down in the old mine water, and we had to add an additional water treatment cleaning process. But as you heard from Charlotte, the technique is working. We are holding all the levels for the permit, and it's going very well now. But Charlotte also pointed out that we have optimized the mine planning. So we will now start to mine in the shallow part of the D zone earlier than before, which will support the ore coming up early from that part instead. So the dewatering was still mainly to go down in the A Zone. But now, when we go directly into the D zone, then the dewatering is decoupled from the time plan and the mine planning.

So you're not dependent on that anymore?

No.

That sounds good. And also, there is a lot going on outside of this area. You have been talking to Nordic Ham. How is that going?

It's going very well. And you know that, for some years back, we signed a memorandum of understanding with the Nordic Harbor. And we're now in full construction with subcontractors also for the offloading facility and the ship loader at the quay in Nordic Harbor. So that is also according to plan and will be ready then in the beginning of 2028, well in time for our first delivery down to Nordic in April 2028 with the copper constraint.

So going over to the finances and the debt financing, you have a bit of news here because you have raised from SEK 4.8 billion to about SEK 5 billion, and you're also pushing it into October. Can you tell us about that?

Yes. So the SEK 5 billion amount is that we are borrowing the amount in U.S. dollars, and that has been the case since the beginning. And of course, we have a bit of fluctuation in the U.S. dollar/SEK rate. So the loan amount will be approximately USD 475 million. But then on top of that, which we have talked about before, you are adding what is called a cost overrun facility. And that is a cushion for the lending banks to say that, okay, we will add the loan amount with a certain amount in order to really be safeguarding that to capture potential extra cost. The cost overrun facility is not the only contingency amount. We have contingency amounts reserved for the remaining CapEx; we have contingency amounts reserved in the sustaining CapEx, but then also we have this cost. The debt-financed cost facility will be approximately plus/minus USD 45 million. But that is an amount that would be decided very, very close to signing. So we are at approximately USD 475 million, plus SEK 45 million in cost, and then in U.S. dollars. Hence, we are saying that approximately SEK 5 billion.

And when you get that money, the SEK 5 billion, you have in total just above SEK 10 billion. Is the project fully financed?

Yes. And according to what I said in the first quarter, now we are also close to realization. We have closed such a huge part of our supplier contracts. So we really feel that comfortable that we have our arms around this project, both in terms of timing and funding.