Swedish miner and smelter Boliden beat forecasts for third-quarter operating profit as Chinese demand buoyed the market for metals and said its Aitik copper mine expansion was on schedule.
Boliden said expansion of the copper mine in Sweden, projected to cost just over 6 billion crowns ($1.1 billion), would double its annual mined ore output to 36 million tonnes and was on track for completion by April 1, 2010.
Global demand for base metals had been firm during the period, the company said, with government stimulus in China continuing to support prices and industrial production.
The underlying result is very strong, said Alexander Vilval, analyst at HQ Bank in Stockholm. Going forward, the big issue is the expansion in the Aitik mine, and now they have communicated that the expansion is on track.
Boliden shares, which have soared nearly 400 percent since the start of the year, were up a further 4.2 percent by 1310 GMT after a conference call with company directors.
It's a justified reaction in the share price, Vilval said.
Operating profit at the company rose to 949 million Swedish crowns ($139 million) from a year-ago loss of 142 million. The average forecast in a Reuters poll was for 812 million crowns.
ZINC & COPPER
Prices for zinc and copper have risen this year, fuelled by government-led growth in China, as well as a weaker dollar, which makes the metals cheaper for some non-U.S. buyers.
Chief Executive Lennart Evrell highlighted the positive effect of these price trends in a conference call, but said he could not offer any forward-looking statement on prices.
However, he said the scale of development in China would sustain demand there.
The building of megacities in China creates a situation of inelastic demand, he said.
Free cash flow was 610 million crowns, the first positive reading since the second quarter of 2008, versus negative cash flow of 142 million crowns in the year-ago quarter.
Boliden also reported revenues of 7 billion crowns, down from 7.5 billion a year ago but marginally higher than the forecast for 6.9 billion in a Reuters poll.
The company, which sells in dollars but incurs costs in Swedish crowns, said fluctuations in the exchange rate between the two currencies had a limited short-term effect on profit.
(Editing by Will Waterman)