Gruvaktiebolaget Viscaria (VISC) Earnings Call Transcript & Summary

Warmly welcome, everybody, to Kiruna and to the Q4 2025 presentation of Viscaria. 2025 has proven to be another extremely eventful year and we are looking forward to another couple of eventful years. So of course the highlight for 2025 was when our environmental permit gained full legal force on April 16. A long journey, some 5 years since we kicked off, and a tremendous relief to have everything, all permits in place. That was followed up that we released our feasibility study on May 8 and also a significant resource upgrade. And after that release, we can immediately start the work with our debt financing and later on this year we could show the market that we have assigned SocGen and ING to be our mandated lead arrangers for a debt financing package. It's also fantastic to continue to tell our investors every quarter that a thrilling exploration program continues to give successful results and more of that later. And in the autumn we concluded 2 new issues, 1 directed and 1 rights issue, oversubscribed both of them, which contributed with some SEK 1.5 billion in cash. And we have continued with all the infrastructure work at site. We are today approximately 300 people on site. Some of them work 7 days a week. So a lot of things is happening. We inaugurated the water treatment plant in October and also later on, we could sign our first Long Lead Item agreement and that was the mill agreement with Metso. And in December, we signed our first offtake agreement with a smelter in Hamburg, Aurubis, a successful agreement. Our deposit continues to deliver significant qualitative growth upsides. In this quarter, we have been able to disclose a mineralization intersected in the B-zone, some 76 meters with 0.99% copper and 1.37 ppm silver. Also we have discovered high-grade copper in the C-zone, 5.8 meters at 2.31% copper and 1.64 ppm silver. And we've done extremely thrilling step-out drilling in the D-zone where we have stepped out some as much as 400 meters and confirms the extension of the D zone from the existing resource. And yesterday, we could press release another fun new that we will host our construction workers at our site for our overnight accommodation. This is a result in discussions with the Kiruna municipality where they asked us to offload the city from our construction workers. So the Viscaria Village is only for the construction period, approximately 2 years, and then part of that will be taken down, part of that will be converted to offices. The fun thing is that on many construction sites around in the world, there are problems with construction workers' accommodations. Here we have done it in a different way. We do it as a hotel. We have the fantastic thrilling hotel operator Strawberry as our operator. So that means you will have a main entrance. You will not go in isolated to your own cabins. You have a main entrance, you have check-in, you have check-out. The interior, the furniture, the bed linen is of higher and better quality so you should feel well taken care of. And also we can offer our construction workers facilities to have fun and do athletic work and sauna activities. So they can feel welcome to the site. This will gain health and security and quality in our construction period, fantastic fun initiatives, which we were proud to release yesterday. To build a mine site is very much more than just to build buildings in itself. Many of you have seen this slide before, which is a rendered layout, but part of this is already constructed. So the big main thing that is happening now is the erection of the processing plant to the left here in the picture. It's a plant of 6,800 square meters and at a capital cost of approximately SEK 2.5 billion and we just started the groundwork for that, which I assume we'll show you a picture of. But again, there's so much more than just doing the buildings. This is just a picture of how many massive of rock, moraine and soil and boulder that we need to transport every year in order to make foundation works for the buildings, the roads, logistical entrance for the mine openings, et cetera. So last year we transported more than 900 million cubic meters of rocks, moraine, soil excavation, et cetera. One must remember that this takes time, it costs money, but we are very well progressing with all of that. So I told you about now the erection of the processing plant and next thrilling big building construction here and this is how it looked like just a few weeks ago when we did the first blast for the groundworks. [Presentation]

And this blast was not only the first blast for our processing plant, it was also the first blast for me. And you ask me how it was? It was of course fun to do it. Most fun to be part of this extremely skilled and experienced team that is helping with all these construction works. All of them are in Kiruna or near Kiruna companies. So we know that we have as a strategy and policy to assign as much as work as we can to companies that are based in Kiruna or within near surrounding. All of them skilled mine workers, construction workers and building workers. So on this slide here, you can see the drill machine that was used for this specific area when we blasted for the groundworks for the processing plant. And again in order to move all this material, every day we have some 16 dumpers moving material. Every dumper takes 40 tonnes and we have up to 300 truckloads every day that we move around. So for every quarter that goes now, we can make a more and more detailed time plan. The time plan is of course subject to building permits, but Long Lead Items, a lot of contractors that need to tick into each other to make sure that everything goes according to plan. And we aim then to have the first initial extraction end of this year, early 2027 and the first copper concentrate coming out late 2027, early 2028 and make 2028 as a ramp-up year and then with the aim of having full production of 2029. And with this, I will hand over for a very thrilling presentation by Ross Armstrong, our Head of Geology and everything that is happening there. Welcome, Ross.

Thank you very much, Jorgen, and good morning to everyone here. Following on from the resource update in May, 2025 has been a year all about maintained momentum on the exploration front and I think this has really come to a climax during the last quarter. In total, throughout the year we drilled 31,000 meters and this has really been focused on the near mine setting, testing the down-dip extensions of the known mineralized zones, which we can see on the cross-section on the right-hand side of this slide. But for today's update, we have 3 drilling new results to share with you today. First, from the B-zone in a previously untested gap, we found a whopping intersection of 76 meters at almost 1% copper. In addition, in the C-zone for the first time, we've discovered high grade copper mineralization, 5.8 meters at 2.3% and this is in an area that's previously been deemed to be noneconomic. And then finally, exploration has continued in the D-zone where a major step-out drill hole has confirmed the extension of the mineralization over 400 meters from the existing resource boundaries. So I'll talk you through today all of these exciting results in more detail. So hopefully, you can start to feel why we're just so thrilled in the geology department at the moment. But before jumping into these results, I want to give a quick status update on Grand Viscaria. You can see on this map the area outlined in yellow. This is a new exploration permit, which we have just been granted within the last few weeks. This area was outlined as an area of interest for us after our summer mapping campaign last year and also due to the geophysical results we got from the drone survey carried out in an adjacent area. But without further ado, let's jump into these exploration results and zoom back into the mine setting. Starting first with the B-zone where we've really found something exceptional. So what we see here is a longitudinal section. So we're looking along the strike length of the B-zone and the coloration comes from grade times thickness. So what this means is that the hot colors, the red and pink and purple, these represent areas with the thicker and higher-grade mineralization. You can see in the bottom left of this section, the B-zone deep. That was a discovery we made during 2024. But the drilling of this discovery left a gap in the mineral resource model that had previously not been tested with drilling and that was until now. Drill hole 25013B was drilled in the exact middle of this gap and the results are just outstanding. 76 meters at almost 1% copper and within this higher-grade intervals as well, including 12 meters at 1.5% copper and 2 ppm of silver. And it's worth noting this correlation that we're seeing as well with the elevated copper grade coming with higher silver tenors as well. Let's put this result into context. So the average thickness of mineralized zones in Viscaria ranges between 10 and 15 meters. If we compare that to the over 75 meters in this intersection, then we're looking at mineralization over 5x thicker than average. So this is really just another scale to the system here. And in fact this isn't even the entire broad mineralized interval. The total interval intersected here was 222 meters at 0.6% copper. And we've seen this or we've seen something similar to this before actually during the 2024 exploration campaign. Drill hole 24115 intersected a very similar interval over 200 meters at 0.5% copper. Following on from our latest result, we've actually completed a follow-up drill hole 25013D and you can see that was targeting around 100 meters southwest of 13B and there, assays are still pending. But from the first visual observations from the drill core, we can see that this is a similar mineralized section to what we see in 13B. But all these results, this begs the question as to why in this part of the deposit we're finding such thick mineralization, such thick intercepts. Well, to answer that question, we think this is well illustrated in this photo of the drill core here. So this is a piece of core from 13B and we can see some varying mineralization styles here, both discordant cross-cutting veins and the more typical stratabound mineralization that we are used to seeing in Viscaria. And this essentially represents the fluid pathways for the hydrothermal fluids that originally brought the metals and brought them upward through the stratigraphy, exploiting structures just like the one outlined in red here. And when these fluids moved up these structures, they eventually met certain strata that were permissive, permeable and reactive and the fluids could then move laterally along these beds to form concordant stratabound mineralized zones. And so it's in this area where we see an abundance of these feeder style veins. That's where we have a higher proportion of mineralized units within the overall host package. And here we just have some more photos to share from the drill core to try and give you a sense of how these rocks look. In this part of the B-zone, the rocks are characterized by this pale coloration and that comes from quite strong ALBI alteration. But we also see potassic-feldspar alteration, hematite and biotite more locally as well. And we can also say this part of the B-zone is quite enriched in magnetite too. So moving on to the C-zone where we have another exciting exploration result to share. You might think well, the C-zone, I've not heard of that one before. Usually when we talk about Viscaria and we look at cross-sections like we have on the slide here; we mention A-zone, B-zone, D-zone, but never really the C-zone. But the C-zone is not something new. It's actually something that's been drilled quite extensively in the past, but it's been disregarded as a barren black shale devoid of economic mineralization. But we here in the Viscaria geology team, we like to look beyond previous biases and apply what we learn into new areas and that's definitely the case here. So in nearby drilling in the D-zone, we noticed more intense hydrothermal alteration, partial bleaching of the graphitic units and so this caused a corresponding break in the geophysical signal as well. And this drove us to push this drill hole 13C, which is basically an extension of 13B. This gave us the drive to push 13C beyond the B-zone and into the C-zone as well. And the result, the first high-grade copper mineralization recorded in the C-zone, 5.8 meters at 2.3% copper and this sits within a wider interval of 24 meters at 1.15% copper. What's really exciting about this result is it's not only the grade, but it's actually how this fits within the larger context within our conceptual exploration model. Here we see a planned view of the Viscaria. So we're now looking down on the mineralized zones and we have the drill hole 13C still here for reference as well. The backdrop to all of this is data from the magnetotelluric survey and you can see in the warm colors, the red and pink, the high conductivity signal from formational conductors in the A-zone and the C-zone. So this is graphitic units basically in the A-zone and C-zone. And if you follow the response from these formational conductors towards the southwest of the deposit, you can see that there's a distinct and sudden break and it's exactly here that we've been drilling and we've seen in the drill core the reason for this. Graphitic units being destroyed by intense hydrothermal alteration, decomposition of the conductive graphite causing this corresponding break in the geophysical signal. And we see it as no coincidence as to the fact that we're making all of our latest discoveries the ABBA zone, the B-zone deep and now this mineralization in the C-zone. These are all located at around 1 kilometer depth in this same corridor. Here we think we're beginning to define a major feeder zone, a zone of hydrothermal outflow. It's a Northwest-Southeast striking structural corridor hosting intense hydrothermal alteration and conducive conditions for the formation of several stacked high grade mantos. So drilling results so far in the B-zone and C-zone, we'll run this up with a new update from the D- zone as well. So if you've been following along our previous quarterly updates, you'll recognize this image, which again is a longitudinal section of the D-zone mineral resource with grade thickness color contours. The black dots around the bottom, these represent our step-out drill holes during 2025 and all of these holes successfully hit mineralization both along strike and further to depth. But where I'd like to draw your attention is to the bottom left of this image, drill hole 24036. And this was actually an older B-zone drill hole that with our new geological interpretation and the geophysical anomalies to justify it, we decided to push this from the B-zone all the way to the D-zone and the results were spectacular. Assays are still pending so we wait for those and that's something to look out for in the future. But we've hit the mineralization over 400 meters from the existing resource boundaries. So what does this mean? Of course this means we've opened up a huge space for resource expansion in the D-zone. Potentially we've outlined the down plunge extension of the southern chute and really I think we're just reiterating the scale of the system that we're now chasing. So I'll wrap this up by summarizing our new results from Q4. Extensive mineralization discovered in the B-zone gap, the first high grades recorded in the C-zone and a major 400-meter step-out in the D-zone. All of this points towards future resource growth and we're excited to continue that exploration into 2026. On the right-hand side of this slide, you see another cross-section of the deposit where we can see the drill holes that we've been discussing today, the mineralized zones and then the backdrop to this is now a slice of the magnetic inversion; which is another tool, another model that we use to guide the exploration. The main message I want to give you from this is that Viscaria remains open. And according to the geophysical indications, this deposit has extremely deep roots. We can see in the magnetic response from the D-zone as well as from B, ABBA and A; the magnetic signal extends beyond 1.5 kilometers depth beyond the depths that we're currently exploring and on top of that, we have several other conceptual targets that we're still yet to test. So looking ahead, we are aiming to maintain this momentum and continue into 2026 and already we have 3 drill rigs continuing to operate in the new mine setting. Furthermore, preparations are well underway for the reflection seismic survey, which will take place during the summer of 2026 and in that we're aiming to map the down dip extensions of reflectors, both known mineralized zones and hopefully new mineralized zones as well, as well as mapping the overall controlling structural architecture for the deposit. Well, warm to say I think some really exciting results today and I hope you follow along in the future during the next quarterly update. So thank you very much for listening. And on that note, I'll hand over to Frida.

Thank you for that, Ross. Then I will walk you through the financial performance in summary for quarter 4 and also full year 2025. If we start with the income statement. We have this capitalized expenses related to exploration and evaluation assets; on the quarter, SEK 78 million, well in line with the same period previous year. If we look at the full year 2025, we had SEK 285 million compared to SEK 331 million previous years. If you look at the operating profit for the quarter, it's minus SEK 26 million compared to minus SEK 20 million for the quarter. And the net profit for the quarter is minus SEK 41 million compared to minus SEK 19 million. Looking at the net profit for the full year is minus SEK 109 million compared to minus SEK 48 million. This higher negative result is mainly driven by a growing organization and also increasing of our financial expenses. If we then look at the cash flow for the period is positive both in the quarter and also during the full year. It's approximately SEK 1.1 billion for the quarter and it's SEK 1.2 billion for the full year. That's of course mainly related to both the shareholder loans and also the share issues that was carried out during the quarter 4. If you then look a bit in the balance sheet. We have this exploration and evaluation assets, approximately SEK 1.6 billion in the end of '25 compared to SEK 1.3 billion in the end of 2024. We have ongoing development almost SEK 900 million by the end of '25 compared to only SEK 165 million at the end of 2024. This ongoing development is substantially higher. This really defines where we are in the project phase right now. And during '25 we also entered a more capital intensive phase of the project. We also got a question in the chat about CapEx for 2026 and that will be approximately SEK 2.4 billion during this year. If we look at the cash and cash equivalents, we have SEK 1.4 billion by the end of the year compared to SEK 232 million end of 2024. The equity is approximately SEK 3.1 billion compared to SEK 1.6 billion previous year. So we are in a really good solid financial position by the end of 2025 primarily due to the share issues that were carried out during quarter 4. The cash proceeds from our directed issue was SEK 800 million and the rights issue generated approximately SEK 738 million after the conversion of the shareholder loan. This ends up in a cash position of SEK 1.4 billion. Of this SEK 1.4 billion, we have allocated SEK 141 million for deposit for our closure costs, which means that we have available funds of SEK 1.266 billion by the end of the year. If we then look a little bit on the debt side, SEK 118 million of the shareholder loan was converted during December, which means that the remaining part of our shareholder loans are SEK 654 million and that's included the accrued and capitalized interest as well. If you then look a bit about the funding requirement of the project, we estimate it to be a mix of debt and equity approximately 60-40. We are continuously updating our calculations based on new terms, new conditions, new decisions in the project. This may and probably will impact our CapEx and the OpEx, but we don't see any major deviation according to our base calculations. In the other hand, we also see a substantial upside because we have a new level of the copper price when we're comparing today's copper price with what we have in our feasibility study and our base calculations. In all of our CapEx, we have a contingency included by 10% to 15%, a little bit depending on which area we are talking about. And on top of that, we also have this cost run facility included of SEK 750 million and we see that this really provides us with sufficient headroom to manage unforeseen cost and new conditions throughout the construction phase. And by that, I leave the word back to Jorgen again.

Thank you, Frida, and thank you, Ross, for great presentations. And as you can see, we have a fantastic good solid foundation, strong financials and an extremely thrilling geology potential in this project. So all the financing discussions are well in progress with our lending banks and also with the export credit guarantee institutes. All permits are now in place. And our bankable feasibility study that we presented in May last year has continued to be rock solid and holds the fort in all our discussions with the lending banks, which we are very proud of. And we are continuously doing infrastructure investments, 1/3 of the site approximately is today constructed and 2/3 then is left. And the team is constantly growing as well with experienced people not only from Sweden, but international as well with experienced miners. So in summary, I would like to invite Charlotte Stjerngren to the scene here and conduct our Q&A session. Welcome, Charlotte.

So a lot has been happening since we met last time. What are you most proud about in this quarter?

I have a hard time to single out 1 specific item because there are so many people that work so hard. As I told you before, we are approximately 300 people logging into the site every day, not that many during the weekends, but we have people here on the weekends as well. And it's such a fantastic atmosphere not only among our own employees, among the consultants, but also the different subcontractors. So it would be unfair to pick out a certain element that to be proud of. I am proud of the progress that we see every week, every month of constructing the site. To construct a site like this is of course not just tailwind. There are challenges not only every day, but every week the things that pops up. But to have a problem-solving atmosphere constantly with people that are taking on those challenges, that is a fantastic feature that we can see at our site.

So I was thinking you would talk about the geology.

I mean as I told you, the geology perspective that Ross talked about today is just fantastic. This is by far Europe's most overlooked copper deposit. And I think it soon will be proven to have a place as Europe's most fast-growing copper deposit as well. But I also want to highlight everybody else's work here. It's so important to keep that atmosphere because we are a strong team only due to the fact that we are evaluating each other for every bits and pieces that we're contributing in this project.

We're going to talk a lot about what's happening on the site. But we have questions from the web. Please continue to write your questions. And there is 1 on the geology. Christian Kopfer is wondering when can we potentially see a new resource update.

We hope that we can do that later this year. I don't want to promise that today still because now it's extremely important that when we do the mineral resource upgrade that they are substantial, qualitative and they can not only just show a certain small piece, but we want to really be able to describe the big picture in a qualitative way. But we are doing our utmost. And as Ross told you, we have 3 exploration drill rigs drilling 24/7 and all results are extremely thrilling. So let's come back in the next quarterly report with a more precise judgment of this.

And all of this parallel tracks happening on the area now; we have the water treatment plant, we have the processing plant and also they are steering when you can open the mine. You're saying have you -- do you still have the same timeline?

I mean there are small adjustments, but nothing that moves the big picture, nothing that moves the needle in a big way. But there are some small pushes from different areas that moved ahead the time schedule with some 3 to 5 months. But overall, we will keep the timetable. One must remember to build something that we are now doing during the next 2 years for some SEK 4.5 billion to SEK 5 billion, it is not done like this. It's a lot of workstreams, a lot of contractors, a lot of things that need to tick into each other; but we have a fantastic planning team, fantastic project management office. So overall, we will keep our timeline and making 2028 as a ramp-up year and then aiming for full production in 2029.

And still doing some exploration already in 2027?

Yes, yes, indeed. So I mean there will be open pit mining already this year where we will take away waste dump so we can go down to the ore and then underground by the end of the year, early next year.

So it's progressing according to plan here. But last time I was here, we talked about the water treatment plant. the lot and there is a process now at the courts. How is that going?

We still not got a verdict from the court, but we are of course in intense and close discussions with the court and authorities and we don't foresee any problems with that. We do expect a verdict from the court within very short. We don't know more than that than within very short. And we don't foresee any problem with that verdict. We have applied for amended conditions, but given the court a couple of different alternatives and we definitely believe that one of those alternatives will be decided by the court. So we wait for that. At the same time, as you all know as well, we found sulfates further down in the mine and also high degrees of uranium. So we are adjusting the water treatment specification a bit and we're building up another step of sulfate treatment as well. So that means that we're now pumping around the water 500 cubic meter per hour in order to stir around and even out the different levels of zinc, copper, uranium and sulfates. And we are of course pressure testing the whole cleaning system and so on and we plan then to release water to the recipient in Q2.

And to do all this, you have the financing in place, more or less. We're waiting for the loan agreement. How is that progressing those discussions?

It's an extremely intense progress of that as well. So the lending banks are doing their due diligence processes and that will take another couple of months. And they're having their independent advisers pressure testing everything. So they're doing technical due diligence, ESG due diligence, legal due diligence, et cetera, et cetera. But all those discussions are well in progress and we have not seen any black spots there that could be [indiscernible].

Any key hurdles. What's the toughest part?

ESG, we're talking about the international banks and they are for natural reasons extremely keen to make sure that we are engaging in the right way with all type of stakeholders; municipality, people, the municipality as such, all authorities, indigenous people, et cetera, et cetera. ESG is a very and should be a tough area to go through in the DD, but we are doing well there as well, as you know, the Viscaria project.

Have you received any indicative terms or what can you say?

We are negotiating long-form term sheets with the lending banks, but it's too early today. But again everything is well in progress and we aim to close the debt financing by the end of Q2 this year.

So that timeline really holds steady.

Yes.

And you have said so far that an additional approximately SEK 1.2 billion is needed. Is that still the case?

Yes, yes. That is indeed still the case. As you heard from Frida, of course I mean we do in constant now calculations because we're getting somewhat adjusted tenders in from suppliers and so on. We have a somewhat cost inflation as well. Some of the foreign purchases are a bit then counteracted by stronger Swedish krona in our favor. So it really swings around abouts. So if I will be conservative, maybe we can foresee some -- a couple of hundred millions more in cost so instead of -- but it's a bit too early stage to say that. And one should remember in this context as well that we have this contingency pillars of approximately SEK 1.5 billion that really supports that. So we feel that we have control over the funding process.

And there has been a question on the contingency. How much has been used so far of that?

I mean so the cost overrun facility of SEK 752 million you cannot touch until the debt financing package is paid out. So that is always stay there until you start to draw on the funding side. Of the contingency in the initial CapEx and the sustaining CapEx, also approximately SEK 750 million. Maybe some SEK 50 million of those have been used now in the initial agreements that we signed. We have signed quite some substantial agreement, but there's a huge amount of pillars left there as well in contingency.

There was a question that Frida answered that SEK 2.4 billion is expected in CapEx in 2026. There is a follow-up on that. How much is expected until 2029?

I mean so we do expect from today's date that we need to raise then another SEK 5.2 billion to SEK 5.5 billion whereof SEK 4 billion in debt and the rest in equity. Again in that amount, approximately SEK 1.5 billion in contingency and those estimations still holds until the day we get cash flow positive.

And we've talked a bit about this touched upon the copper price, Frida did that. It's much higher now than before. How does that affect you?

I mean it really affects us in a good way. One should, however, remember that the debt financing package and the lending banks, they are using a lower copper price than we're having in even in our bankable feasibility study. So they are using a price lower than SEK 9,500 to make sure. And we ourselves, we have the financial model still at SEK 9,500. Of course we can allow ourselves to moderate maybe a copper price around SEK 11,000 now to see in the longer term. But we are still not even using the SEK 13,000 that the market is today.

And another positive is the precious metals like gold and silver prices have also gone up? Will that affect your figures?

I mean in the offtake agreement with Aurubis, both gold and silver are payables. We have decided not to put that into our financial models yet because it is mainly the silver that we can see concentrate of in the size so we can get payable. We will save that to have as a bonus when we start to ship our first concentrate. But again both silver and gold are payable in our agreement with Aurubis.

Mentioning the Aurubis agreement, some were a bit disappointed you signed for half of your offtake. What's your view on that?

Nobody should be disappointed with that. This is a sign of strength, okay? If we were pushed, then we would have sold 100% of our material in an offtake. This is a sign of strength that we can negotiate to only then sell half and have half out to other players in the market, mainly then to other smelters.

So who is that?

I mean we only have -- we don't have too many smelters in Europe. So it could be any of the large 2 left. I mean we have the Polish KGH and then we have the Swedish Boliden Ronnskar and then we have Aurubis as the big smelters in Europe. So those are the suspects. Then of course we have traders that are extremely eager to lay their hands on our copper concentrate as well. So we'll see. We are negotiating with different parties. It could also be the case that we will extend our agreement with Aurubis depending on how other players are playing this game.

I hope we have answered most of the questions, hopefully all that have come in from the web. Do you want to summarize this in any way, Jorgen?

I am extremely proud how this project is progressing. I am pleased with our negotiations with the lending banks. I'm also pleased with the continued support we have from all our investors that have indicated commitments to continue to support us in upcoming issues or issue in connection with the debt financing. And of course I mean it's hard to shy away from the fantastic geological results that we get through every month, which really, really show the fantastic growth potential, high grade potential in this project. Thank you, Charlotte. And with that, we say thank you from Kiruna to all of you and we look forward to see you in another 3 months. Thank you.