In a recently published article in Affärsvärlden, a number of claims are made that are incorrect and misleading. Viscaria believes it is necessary to clarify the facts to avoid the market getting a misleading picture of the company’s operations and conditions.
Reporting according to PERC 2021
It is alleged that Viscaria does not comply with applicable reporting standards, in this case PERC 2021. This is incorrect. The company reports in accordance with PERC 2021 and clearly reports inferred resources in a separate chapter of the Feasibility Study (FS). These resources are also provided with two disclaimers in the Executive Summary, as evidenced by the public documents available on Viscaria’s website. In the published presentation, which is also available on the website, clear comparisons between the Feasibility Study and the mine plan are presented, specifically on pages 21, 23 and 28.
The publication Affärsvärlden suggests that Viscaria would report in a dishonest manner. All countries that apply PERC 2021 follow the same regulations, and it is fully permissible* to account for inferred resources in a mining plan – provided that this is done separately and with clear reservations, which is exactly what Viscaria has done. Canada and Australia comply with NI-403 and JORC respectively, regulations that are slightly stricter, but Europe complies with PERC.
The type of criticism that is made amounts in practice to an attack on the company’s Competent Person (Competent Person according to PERC 2021), Thomas Lindholm from GeoVista. There is no factual basis for the claim that the FS show flaws. Lindholm is one of Sweden’s most experienced mining engineers and is well-known in the industry for his work with international reporting standards. He is behind the company’s application of PERC 2021. In addition, a number of internationally recognised technical consultants have participated in the work on the FS, including: SRK Consulting, Metso, Paterson & Cooke, TCS and ITASCA. All of these players have established experience from complex mining projects globally and would not participate in a FS with poor quality or questionable assumptions. Their participation confirms the high standard of the FS.
The FS and the mine plan
The FS is based on a Mineral Reserve of 41.8 Mt and forms the basis for the project’s financing. The mine plan covers 49.3 Mt, where the difference – about 8.0 Mt or 16% – is inferred resources. It is therefore unclear why it is claimed that one third of the company’s copper would not be minable. It is crucial to distinguish between the FS and the mine plan. While the FS forms the formal basis for funding, the mine plan reflects how the mining is actually set to be carried out. In this, higher concentrations in the D-zone are prioritised early, which strengthens cash flow and the robustness of the project. The latest included drilling data in the FS is from August 15, 2024. Subsequently, a further 25,000–30,000 metres of drilling have been carried out, which has been taken into account in the mine plan. This strategy and its effects are presented in the company’s public presentations and in the webcast on the website.
It is important to emphasise that the FS has not been delayed. It would be irresponsible to present a completed FS, including a financing calendar, before the environmental permit has gained legal force, as this is a crucial prerequisite for the implementation of the investment. When the permit process dragged on, the company chose to use this period to further quality assure, validate and load test the FS. This is in line with good project practice.
It is industry practice that only summaries of Feasibility Studies are published, rather than full studies. The full FS is of course provided to banks and financial actors who, under non-disclosure agreements (NDAs), together with their technical advisors, wish to conduct a detailed review. This is a well-established procedure. Viscaria’s FS comprises almost 800 pages and has been produced with the same high level of ambition as the company’s environmental permit application. Viscaria and its co-authors believe that the FS is of the highest international standard.
External interest
Affärsvärlden refers to “industry experts” who claim that Viscaria would have difficulty financing its project based on the current basis. The company has difficulty understanding who this source is, as there have been continuous and constructive talks with both Swedish and international project finance banks for several years. These contacts have also participated in the dialogue during the work on the FS, precisely with the aim of ensuring realistic and feasible assumptions.
Affärsvärlden refers to a statement made by another mining company that it has “run the numbers on the project”, but it is unclear what data that statement is based on. Since May 2020, when the current management took office, Viscaria has not been offered for sale and no sale discussions have taken place. Viscaria is not, and has not been, for sale. The company has great confidence in its project and its ability to excecute it successfully. According to Malcolm Norris, former CEO of Sunstone, which previously owned the Viscaria mine, discussions were held in 2015 about a possible collaboration with a major Swedish mining company, but no discussions regarding a sale took place. Therefore, there is no basis that would allow for a serious valuation of Viscaria.
Affärsvärlden further states that investors with mining backgrounds are conspicuous by their absence from Viscaria’s investor base. The company questions what type of investors are being referred to, as investors with extensive mining backgrounds are rare in most Swedish listed mining companies. Viscaria considers that this statement is irrelevant without specifying which actors are being referred to. Viscaria has a number of institutional investors who are also involved in other Swedish mining companies, such as Robur, SHB and SEB. These institutions have a good ability to make qualified assessments and comparisons between different companies in the sector. The claim that “the miners are not convinced” remains unfounded without these actors being named.
As for the claim that “interest from the establishment seems weak”, there are concrete examples that speak against this. Freeport-McMoRan, one of the world’s largest copper mining companies, has approved the addition of one member of its senior operational management, Mark Johnson, to Viscaria’s Board of Directors. Mark Johnson has worked for the company for over 40 years and is currently responsible for one of the world’s largest copper mines – Grasberg in Indonesia. Such a commitment from a leading industry profile should be interpreted as a clear expression of trust and interest.
The company’s mining expertise
In addition to Mark Johnson, Markus Petäjäniemi and Lars-Eric Aaro are also on Viscaria’s Board of Directors – both with long and distinguished backgrounds in the Swedish and international mining industry. In addition, Jane Lundgren Ericsson, former member of the group management team at the Swedish Export Credit Corporation (SEK), where she worked for 24 years, 13 of which were in senior positions. Her experience in project finance is hard to beat and has been very valuable in that work. All in all, this probably constitutes the most qualified board with operational mining experience in the Swedish mining industry.
Regarding the company’s management structure, only one person, the former geology manager, has left the business since the management team was restructured prior to the listing on the main list. This role has been replaced by an internal candidate with many years of experience from Viscaria’s operations. Otherwise, the management consists largely of the same people who have been involved since 2020. Former Head of Mine, Glenn Nilsson and Head of Environmental and Sustainability, Anders Lundkvist, two of the key people, have chosen to reduce their working hours but are still very active in all central workflows. Both participated, for example, in connection with the Annual General Meeting last week in Kiruna, where Anders also presented the company’s strategy for water treatment.
The main driver behind the increased demand for copper is the growing global middle class, not just the green transition. Electrification and climate investments reinforce the need, but structural demand is fundamentally driven by urbanisation, infrastructure expansion and increased living standards. At the same time, the copper industry faces significant challenges in increasing production in line with demand.
Finally, it is stated that Viscaria’s net cash position amounts to SEK 49 million. This is incorrect. As of March 31, cash and cash equivalents amounted to SEK 382.3 million, of which SEK 61 million is reserved as a rehabilitation guarantee. Against this, there are current liabilities totaling SEK 317.8 million, the majority of which consists of the shareholder loan of SEK 314.6 million that, according to the letter of intent communicated in November 2024, is to be converted into shares. Therefore, it should not be deducted when calculating the net cash position. The same applies to the convertible debenture of approximately SEK 15.6 million from Norrlandsfonden. The remaining SEK 3.2 million consists of minor tax/pension liabilities.
Viscaria wants to emphasise that the company welcomes scrutiny – but that such scrutiny should rest on facts. Which conclusions you then choose to draw is of course up to each individual actor.
*) PERC 2021
7.25. It is accepted that mine design and planning in a LoMP may include a proportion of Inferred Mineral Resources. If the Inferred Mineral Resource category is considered in the mine design, mine planning or economic studies, the results of which are Publicly Reported, full disclosure must be made, and the effect on the results of the Technical Studies must be stated.
7.26. A LoMP must be economically viable without any Inferred Mineral Resources included in the mine plan to support the declaration of Mineral Reserves. Where a material amount of production in the LoMP is based on Inferred Mineral Resources, a comparison of the results with and without these Inferred Mineral Resources must be shown, and the rationale (including a risk assessment) behind their inclusion must be explained. The proportion of Inferred Resources included in the LoMP must be reported, and a proximate statement that “Only Probable Mineral Reserves and Proved Mineral Reserves have been used to establish the economic viability of the mine design in Technical Studies” must be included.