TIDMTALV
RNS Number : 2709O
Talvivaara Mining Company PLC
04 March 2009
STOCK EXCHANGE RELEASE
4 March 2009
Talvivaara Mining Company annual accounts review for year ended 31 December 2008
Transforming a project into a mine
Highlights of 2008
* Commercial scale mining commenced with a first blast on 1 April 2008
* Talvivaara placed an offering of EUR 84.9 million of convertible bonds on 14 May
2008
* Production scale materials handling processes, including crushing, stacking and
bioheapleaching of ore, commenced during the month of July 2008
* USD 320 million project finance facility was drawn down starting 3 September
2008
* First metal sulphides from the Talvivaara mine were precipitated on 1 October
2008
* A 42% increase in measured and indicated mineral resources to 642 million tonnes
was announced on 4 December 2008
* Operating loss for the year was EUR (4.3) million (2007: profit of EUR 2.3
million)
* Capital expenditure for the year was EUR 429 million (2007: EUR 134 million)
* Cash at year end EUR 82.7 million (2007: EUR 153.5 million)
Highlights since the end of the review period
* First lot of 100 tonnes of nickel sulphide to off-take partner Norilsk Nickel
Harjavalta Oy was shipped on 19 February 2009
* Finnvera Plc has granted an up to EUR 50 million investment and working capital
facility to Talvivaara Project Ltd. to be utilised during 2009
* Planning for a secondary listing on the main list of NASDAQ OMX Helsinki stock
exchange ongoing
Key figures
+---------------------------------------+------------+--+------------+--+------------+
| | | | 2008 | | 2007 |
+---------------------------------------+------------+--+------------+--+------------+
| Operating profit (loss) | EUR | | (4,296) | | 2,332 |
| | '000 | | | | |
+---------------------------------------+------------+--+------------+--+------------+
| Net profit (loss) | EUR | | 5,832 | | (9,928) |
| | '000 | | | | |
+---------------------------------------+------------+--+------------+--+------------+
| Earnings per share | EUR | | 0.03 | | (0.06) |
+---------------------------------------+------------+--+------------+--+------------+
| Return on equity | | | 1.6% | | -6.3% |
+---------------------------------------+------------+--+------------+--+------------+
| Equity-to-assets ratio | | | 48.5% | | 90.0% |
+---------------------------------------+------------+--+------------+--+------------+
| Capital expenditure | EUR | | 429,086 | | 134,139 |
| | '000 | | | | |
+---------------------------------------+------------+--+------------+--+------------+
| Net interest-bearing debt | EUR | | 285,467 | | (152,036) |
| | '000 | | | | |
+---------------------------------------+------------+--+------------+--+------------+
| Debt-to-equity ratio | | | 67.3% | | -48.3% |
+---------------------------------------+------------+--+------------+--+------------+
| Cash and cash equivalents at the end | EUR | | 82,713 | | 153,466 |
| of the year1 | '000 | | | | |
+---------------------------------------+------------+--+------------+--+------------+
| Number of employees at the end of the | | | 239 | | 64 |
| year | | | | | |
+---------------------------------------+------------+--+------------+--+------------+
1 Includes Available-for-sale financial assets for 2007
All reported figures in this release are unaudited.
CEO Pekka Perä:
"2008 was a very difficult year for the financial markets and much of the world
economy, but, despite the decline in the nickel price it was generally a good
one for Talvivaara. We achieved all our planned milestones, from the start of
mining in April to the first metal production, on time, in October. On top of
that, we further strengthened our financial position through a successful EUR 85
million convertible bonds offering in May.
Like any new project, we have however had teething problems. The ramp-up
process, including mining, bioheapleaching and metals recovery, has generally
progressed very well, but we have faced challenges in ramping up our crushing
circuit. Corrective actions with the crushing equipment have been taken, but
some further de-bottlenecking still remains to be done.
While achieving the planned level of production remains our main focus in 2009,
we are, given the present unpredictability of base metals prices, also focusing
on conserving our cash resources. Accordingly, we have deferred all capital
expenditure which is not necessary for achieving the budgeted production, until
2010. I am, however, very happy to confirm that we are continuing our
recruitment efforts according to plan to strengthen our already skilled team of
professionals. All in all, I look forward to continued delivery on our plans and
making great progress in the year ahead."
Enquiries:
Talvivaara Mining Company Plc
Pekka Perä, CEO Tel. +358 20 712 9800
Saila Miettinen-Lähde, CFO
MerlinTel. +44 207 653 6620
David Simonson
Tom Randell
Anca Spiridon
Cocomms
Anna-Mari Tiilikainen Tel. +358 9 6689 6925
Presentation and live webcast on 4 March 2009 at 13:00 GMT/15:00 EET
A combined presentation, conference call and live webcast on the Annual Results
will be held on 4 March 2009 at 13:00 GMT/15:00 EET at Hotel Scandic
Simonkenttä, Simonkatu 9, Helsinki, Finland. The presentation will be held in
English.
http://qsb.webcast.fi/c/customers/customers_2009_0304_talvivaara_results_2008/
A conference call facility will be available for a Q&A with senior management
following the presentation.
Europe & U.K Participants: +44 (0)20 7162 0025
US Participants: +1 334 323 6201
Conference ID: 827977
Further details on the event can be found on the Talvivaara website,
www.talvivaara.com. The webcast will also be available for viewing on the
Talvivaara website shortly after the event until December 2009.
Talvivaara - transforming a project into a mine
In 2008, Talvivaara transformed from a project company pursuing a challenging
construction project to a mine ramping up its production. The year saw mining
operations commence with a first blast in April, materials handling and
bioheapleaching starting in July, and the first metal sulphides being
precipitated from leach solution in October. Throughout the year, construction
activities also continued with almost 2,000 contractor personnel working at the
mine site during the peak construction period in late summer and early autumn of
2008.
While the project milestones were all achieved on time despite the challenging
project timetable, the early stages of production faced some problems in the
ramping up of materials handling processes. As a result, the amount of crushed
ore on the heap pad fell short of the budgeted levels which forced Talvivaara to
reduce its production targets for 2009 to 15,000 -18,000 tonnes of nickel.
The geological work done at the Kuusilampi deposit resulted in a significant
increase in mineral resources being reported in December 2008. The measured and
indicated mineral resources increased by 42% to 642 million tonnes, while the
total mineral resources grew by 76% to 1,004 million tonnes.
As Talvivaara did not yet produce commercial amounts of metal sulphides in 2008
and hence had no revenues, the financial development of the Company largely
reflected construction related spending and financing transactions. At EUR 429
million, capital expenditure for the period included primarily costs related to
the construction of the mine and the Talvivaara-Murtomäki railroad and was
moderately higher than anticipated due to cost escalation in some earth works
contracts and certain late stage design changes in the metals recovery plant.
The expenditure was financed with equity during the early part of 2008, while
the Project Term Loan of USD 320 million was utilised during the last four
months of the year. In May 2008, the Company issued a convertible bond of EUR
84.9 million due in 2013. Cash and cash equivalents at year end amounted to EUR
82.7 million.
Base metals markets suffering from global economic downturn and lack of demand
While the early months of 2008 still saw nickel prices at reasonably good levels
in the long term perspective, the latter half of the year witnessed a drastic
drop in prices as well as demand. Starting from a high of USD 33,185 per metric
tonne (USD 15.1/lb) in early March, the London Metals Exchange ("LME") nickel
cash price declined to an all-year low of USD 8,810/tonne (USD 4.0/lb) in
October and recovered slightly to above USD 11,000/tonne (USD 5.0/lb) by the end
of the year. In the meantime, the nickel stock levels at LME rose from slightly
more than 43,000 tonnes in July to almost 79,000 tonnes at the end of year,
reflecting a dramatic drop in demand stemming from the global financial crisis
and continued destocking in the steel industry.
The global nickel mining industry reacted to the market development by
announcing significant production cuts amounting to some 300,000 tonnes in 2009.
This represents more than 25% of the previously anticipated production level for
the year and is expected to bring the market closer to supply/demand balance for
the time being.
The poor demand and price development has continued into the first months of
2009 with the LME nickel cash price at approximately USD 10,000/tonne (USD
4.5/lb) and stock level at above 98,000 tonnes in late February. Although no
sudden improvement in the market environment is expected in the near term, the
economic stimulus packages issued by numerous governments combined with the
reduced supply are expected to moderately improve the market situation going
into 2010.
The other metals of relevance to Talvivaara - zinc, cobalt and copper - also
suffered from the market conditions. The zinc price averaged at approximately
USD 1,880/tonne (USD 0.85/lb) for 2008 with the all-year low at USD 1,040/tonne
(USD 0.47/lb) in early December and all-year high at USD 2,800/tonne (USD
1.27/lb) in early March. Cobalt prices dropped from the high of USD 52.5/lb in
March to USD 12.5/lb in early December and have continued to decline in the
early part of 2009. The copper cash price varied between USD 8,980/tonne in July
and USD 2,770/tonne at the year-end. In early 2009, the price has recovered
slightly, staying above USD 3,100/tonne.
Overall, the market environment has not affected Talvivaara's production plans
for 2009 or beyond. In the long term, the Company expects its operations to be
profitable at current present price levels. However, the first months of
production in 2009 will be cash flow negative due to higher than average unit
cost of production during ramp-up. This is primarily related to the production
process involving bioheapleaching, in which mining and materials handling costs
during ramp-up are essentially the same as in full-scale production, but
revenues from metal sulphides only grow gradually as increasing amounts of leach
solution are obtained from the growing heap.
Financial review
As the production of metal sulphides at the Talvivaara mine did not yet reach a
commercially significant level before the year end, the Company had no revenues
during the year ended 31 December 2008 (2007: EUR 0). The Company's other
operating income, amounting in total to EUR 29.8 million (2007: EUR 13.6
million), consisted mainly of net realised gains on available-for-sale financial
assets and currency option contracts, and of fair value gains in nickel and zinc
forward swap contracts.
The Company's operating loss amounted to EUR (4.3) million (2007: operating
profit of EUR 2.3 million). The inventories and expenses increased substantially
compared to the previous period as a result of the commencement of production
activities during the year. Employee benefit expenses including the value of
employee services in the employee share option scheme were EUR (8.9) million
(2007: EUR (4.0) million), with the increase attributable to increased number of
personnel. Depreciation amounted to EUR (5.8) million (2007: EUR (0.8) million),
reflecting the start of depreciation of a substantial part of the mine assets in
November 2008.
The profit for the year amounted to EUR 5.8 million (2007: EUR (9.9) million).
The finance income of EUR 9.2 million (2007: EUR 4.3 million) was mainly related
to interest income on deposits and exchange rate gains, whereas the finance cost
of EUR (13.0) million (2007: EUR (11.5) million) was largely caused by exchange
rate losses and expenses related to the Project Term Loan, the senior unsecured
convertible bonds due 2013 and a term loan for the railroad construction. Income
tax expense was EUR 13.9 million (2007: EUR (5.0) million), reflecting
recognition of deferred tax assets on the grounds that commercial production at
Talvivaara had commenced and that future taxable profits were considered
probable.
On the balance sheet as at 31 December 2008, the Company's current assets
amounted to EUR 179.9 million (2007: 165.6 million) and the non-current assets
to EUR 694.0 million (2007: EUR 184.5 million), bringing the total assets to EUR
874.0 million (2007: EUR 350.0 million). Property, plant and equipment totalled
EUR 552.5 million (2007: EUR 129.7 million), with the increase over the previous
year reflecting the high capital expenditure in 2008. This expenditure included
primarily costs incurred as a result of the construction of the Talvivaara mine
(EUR 346.8 million) and the Talvivaara-Murtomäki railroad (EUR 29.6 million),
expenditure related to limestone handling equipment which was not within the
scope of the mine construction plan as described in the Company's Bankable
Feasibility Study of March 2007 (EUR 19.5 million), and certain production
equipment which have subsequently been covered by leasing arrangements (EUR 32.4
million). The expenditure related to mine construction was moderately higher
than anticipated due to cost escalation in some earth works contracts and
certain late stage design changes in the metals recovery plant.
Other notable changes in the Company's assets include a substantial increase in
the fair value of derivative financial instruments, in particular nickel and
zinc forward swaps, the non-current portion of which amounted to EUR 116.0
million (2007: EUR 9.8 million) and current portion to EUR 40.8 million (2007:
EUR 0.8 million).
Talvivaara's total equity was EUR 423.9 million (2007: EUR 315.0 million). The
Company has applied hedge accounting to a substantial part of its nickel forward
swap contracts, and therefore recognised the effective portion of the changes in
fair value of cash flow hedges, amounting to EUR 72.3 million net of tax (2007:
0), directly in equity.
Total liabilities amounted to EUR 450.1 million (2007: EUR 35.0 million) with
total borrowings representing the largest part of the liabilities at EUR 368.2
million (2007: EUR 1.4 million). The increase in the borrowings resulted largely
from the offering of EUR 84.9 million of senior unsecured convertible bonds due
2013, the utilisation of the Project Term Loan amounting to EUR 229.9 million,
and partial draw down of a railroad term loan facility to the amount of EUR 25.7
million. The equity component of the convertible bonds of EUR 10.9 million is
included in the Company's total equity.
The net cash used in operating activities was EUR (18.8) million (2007: EUR
(27.6) million) and net cash used in investing activities EUR (401.8) million
(2007: EUR (133.1) million). As net cash generated in financing activities was
EUR 376.7 million (2007: EUR 285.4 million), the net decrease in cash and bank
overdrafts amounted to EUR (43.8) million (2007: EUR 124.7 million). Cash and
bank overdrafts at the end of the year totalled EUR 82.7 million (2007: EUR
153.5 million).
Financing
Talvivaara closed an offering of EUR 84.9 million of senior unsecured
convertible bonds due 2013 on 20 May 2008. The securities are convertible into
11.5 million fully paid ordinary shares of Talvivaara. The securities carry a
coupon of 5.25% per annum, payable semi-annually in arrears. The initial
conversion price is GBP 5.886, which represents a 38% premium above the
reference share price of GBP 4.265. The GBP/EUR exchange rate used to determine
the euro denominated proceeds was 1.255. The securities were issued at par and
will redeem at par on maturity.
The USD 320 million (EUR 230 million) Project Term Loan was fully drawn between
September and November 2008. The loan carries an interest rate of LIBOR + 2.75%
prior to, and LIBOR + 2.00% after, economic completion, which the Company
anticipates to take place in 2010. Repayments of the loan are scheduled to start
in June 2010 and to extend into 2016. Certain information covenants, financial
ratio covenants and other covenants customary to project finance facilities
apply to the loan. As at 31 December 2008, Talvivaara was in compliance with the
agreed covenants.
As required under the Project Term Loan Facility Agreement, Talvivaara has
hedged nickel and zinc through forward swap contracts over the period of April
2009 through December 2011. The amount of nickel hedged is 15,961 tonnes at the
weighted average price of USD 23,611 per tonne. For zinc, the corresponding
figures are 38,017 tonnes at the average price of USD 1,949 per tonne.
In October 2008, Talvivaara Infrastructure Oy entered into a EUR 45 million term
loan facility agreement to finance the construction of a 25 km railhead from
Murtomäki to the Talvivaara mine. As at 31 December 2008, Talvivaara
infrastructure had drawn down EUR 25.7 million of the loan.
Subject to agreed criteria for minimum transportation volumes on the railroad
being fulfilled, the Finnish State will reimburse the construction expenses to
Talvivaara Infrastructure Oy up to an amount of EUR 48.8 million (including 22%
VAT) in two instalments in 2010 and 2011. Talvivaara Infrastructure Oy intends
to apply this reimbursement towards repayment of the railroad term loan. As a
result of the reimbursement, the railroad will become property of the
Finnish State and a part of the national rail network.
In August 2008, Talvivaara entered into a financing arrangement, whereby certain
production equipment will be leased by HSH Nordic Finance Talvivaara Ab
("Special Purpose Entity") to Talvivaara Project Ltd upon full acceptance of the
equipment by Talvivaara Project Ltd. The lease term is anticipated to commence
during the first half of 2009. The Special Purpose Entity has drawn down a EUR
32 million loan to finance the equipment and has used the loan amount to
reimburse the acquisition cost of the equipment to Talvivaara Project Ltd.
Construction project nearing completion, production ramp-up ongoing
Construction of the mine, which had started in April 2007, continued throughout
2008 with focus in the early part of the year on preparations for mining,
materials handling and bioheapleaching operations, and in the latter half of the
year on completion of the metals recovery plant. The project proceeded on time
all through, allowing the mining operations to start on 1 April and the
crushing, stacking and bioheapleaching to commence sequentially during the month
of July. First metal sulphides were precipitated from the leach solution on 1
October, as planned.
Total mining during the year amounted to 3.9 million tonnes, of which 2.5
million tonnes was ore. The capacity of the mining department ramped up as
planned and exceeded demand, which was curtailed by the limited crushing
capacity stemming from system design problems in the secondary and tertiary
crushing circuit.
The problems in the crushing circuit emerged early on in the ramp-up process,
leading to numerous modifications and amendments being made to the system during
the last quarter of 2008. By the end of the year satisfactory capacity had been
reached, but by then the amount of crushed ore on the heap pad had fallen short
of the budgeted levels to such an extent that Talvivaara was forced to reduce
its production target for 2009 to 15,000-18,000 tonnes of nickel.
While the first metal sulphides from leach solution were successfully produced
in October, the amount of leach solution available for metals precipitation
remained too small for commercially significant production during the remainder
of the year due to the smaller than budgeted amount of ore under leaching at the
time. The metals recovery plant was however tested according to plan during the
last months of the year to secure its operability for commercial grade and scale
production in early 2009.
The bioheapleaching process performed as expected and in line with the pilot
study results. The heap temperatures quickly reached levels of 90 C or more,
while leach solution temperatures rose to above 50 C. The strong thermal
reactions, along with the actual metal contents and bacterial counts detected
from the leach solutions, gave a strong indication of the process being active
and performing well. The prime challenge with the process in its first few
months of operation was excess water in the circulation, which resulted from
heavy rains during the autumn and the drainage pipes also from the unfilled
parts of the heap pad draining waters into the collection ponds. This problem
has since diminished, as a larger and larger proportion of the heap pad is
covered by the growing heap, and as the amount of water flowing into the system
from the surrounding areas has been substantially reduced as a result of
freezing temperatures during the winter months.
While the ramp-up of production continues through 2009, the construction project
is nearing its completion to the extent necessary for the planned production
levels in 2009 and 2010. Capital expenditure, which is only required to achieve
planned production levels in 2011 and beyond, has been deferred until 2010.
Infrastructure
Construction of the 25 km Talvivaara-Murtomäki rail connection started in
February 2008. The main contractor for the project is the state-owned company
VR-Track Ltd. The railroad construction has progressed on schedule and within
the original budget of EUR 40 million and the railhead is scheduled to
be operational in August 2009.
The improvement works and partial re-routing of the regional road number 870
bypassing the mine area on its eastern side and the local road number 8714
crossing the mine area in the east-to-west direction have been largely completed
during 2008.
The pipeline for the in-take of the process water from Lake Kolmisoppi was
commissioned on time and has been operational since July 2008.
The Talvivaara mine was connected to the Finnish national main grid in January
2008 through a 110 kV power line constructed from the Vuolijoki substation to
the mine.
Significant increase in mineral resource
In December 2008, Talvivaara announced a 42% increase to 642 million tonnes in
Measured and Indicated Mineral Resources, as defined by the JORC code, and a 76%
increase to 1,004 million tonnes in Measured, Indicated and Inferred Resources,
as defined by the JORC code, in the Kuusilampi and Kolmisoppi deposits. The
increased resources contain approximately 2.2 million tonnes (up from 1.3
million tonnes) of nickel metal and 5.0 million tonnes (up from 2.9 million
tonnes) of zinc metal, further reaffirming Talvivaara's position as one of the
top nickel mines globally and an internationally significant zinc producer.
The resource increase resulted from a drilling campaign focused on ore boundary
definition up to 300 metres north of the previously known boundaries of the
Kuusilampi orebody. The Kuusilampi mineral resource now totals 505 million
tonnes in Measured and Indicated Categories and 826 million tonnes with Inferred
Resource included. The Kuusilampi orebody is still open at north, east, south,
and at depth.
Mineral resources at the Kolmisoppi deposit remain at their previous levels, as
the drilling campaign only covered the Kuusilampi deposit for mine and support
area planning.
As a result of the increase in mineral resources, Talvivaara will re-evaluate
its options for production expansion. Previous studies based on the mineral
resource increase announced in December 2007 had indicated a production
expansion to be permittable, and economically and technically feasible.
Research and development
The joint feasibility study on manganese extraction from the Talvivaara ore
continued with Outokumpu Oyj in accordance with the cooperation agreement signed
on 22 June 2008. The feasibility study encompasses an evaluation of the
technical and commercial feasibility of employing electrowinning technology for
the extraction of manganese metal and manganese oxide from the leach solution
generated from Talvivaara's bioheapleaching process.
Recent research by the Company has produced encouraging results on the
electrolytic recovery of high-purity manganese metal and manganese oxide from
the leach solution. The latest finding is that manganese sulphate, which is used
e.g. in batteries, can also be produced.
The ore at the Talvivaara deposits has a manganese content of approximately
0.3%, which should enable annual production of more than 30,000 tonnes of
manganese, according to the Company's present production plan. In the
bioheapleaching process, recovery of manganese has been found to be comparable
to that of nickel and zinc.
Any decisions on potential investment in commercial scale manganese production
have been deferred due to the presently unpredictable base metals markets and
the globally difficult financing environment.
In addition to the manganese studies, Talvivaara has continued active
development and optimisation of the bioheapleaching technology, and studies
related to chemical and biological iron removal from the leach solution and
utilisation of gypsum residue. Many of the studies were conducted in cooperation
with Tampere, Helsinki and Lappeenranta Universities of Technology, University
of Oulu, the Geological Survey of Finland and several foreign universities.
Research funding has been obtained from the Finnish Funding Agency for
Technology and Innovation.
Permit issues
Talvivaara's environmental and water permit issued on 29 March 2007 became final
and binding through a resolution by the Supreme Administrative Court ("SAC") of
Finland published on 24 November 2008.
The SAC ruling rejected all the appeals and upheld the terms of the permit
issued by the Northern Finland Environmental Permitting Agency, as amended by
the Appeal Court of Vaasa on 15 February 2008. The amendments to the permit
introduced by the Appeal Court of Vaasa had no significant cost consequences to
Talvivaara.
Talvivaara's application for the extension of the area covered by the existing
mining license was approved by the Ministry of Employment and Economy in October
2006 and the decision was subsequently upheld by the SAC in October 2007. The
land surveying and redemption proceedings regarding the extension have, however,
been appealed both on the compensations awarded and on the proceedings
themselves. The Ministry of Employment and Economy, being the competent appeal
authority on procedural issues, gave its ruling on 15 August 2008, dismissing
all the claims and demands asserted by the claimants. The decision by the
Ministry was appealed by one group of local private persons to the SAC, where
the case is still pending. The appeal process on the compensation awards is
pending with the Land Court of Rovaniemi. The management does not expect either
of the pending court cases to have any material bearing on the projected cost
level, the conduct of the mining and metals recovery operations or further
development of the project.
Environment, health and safety
In 2008 Talvivaara continued to observe its environmental management policy
based on responsibility, transparency, and continuous improvement and
assessment. Despite the large scale construction activities and start-up of
production during the year, the impact of Talvivaara's operations on the
surrounding environment was minor.
The focus of environmental management during the year was on setting up the
environmental monitoring systems, as stipulated in the environmental permit, and
on constructing environmental protection structures to safeguard the environment
from the effects of the mining activities. Environmental monitoring was
extensive, comprising construction phase, production, emission and environmental
impact monitoring. The activities were intensively supervised by the
Environmental Centre of Kainuu as the supervising authority.
The massive construction works in the area increased the solid particle levels
of surface waters at some locations of the mine site. Water treatment measures
have therefore been stepped up by additional dam structures and clarification
ponds.
No environmental compensations related to mining activities were paid in 2008.
The environmental security placed for future restoration of the area amounted to
EUR 13.6 million by the end of the year.
Safety is of key importance to Talvivaara and its contractors on the mining
site. Safety practices at the site are based on the instructions and guidelines
approved by the management and are in accordance with the Finnish industrial
safety legislation. In 2008, contractors' safety practices were controlled by
weekly safety rounds, and the local industrial safety authorities paid regular
visits to the construction site. Safety training is provided for personnel
working for contractors as well as for Talvivaara's own employees.
The safety measures were effective, with only 26 relatively minor lost time
injuries to contractor personnel and 9 to Talvivaara's own employees during the
period. This results in a frequency of 16 lost time injuries per one million
working hours, which is substantially below the long term construction industry
average 80 and mining industry average of 40.
Risk management
In line with current corporate governance guidelines on risk management,
Talvivaara carries out an ongoing process endorsed by the Board of Directors to
identify risks, measure their impact against certain assumptions and implement
the necessary proactive steps to manage these risks.
Talvivaara's operations are affected by various risks common to the mining
industry, such as risks relating to the development of Talvivaara's mineral
deposits, estimates of reserves and resources, infrastructure risks, and
volatility of commodity prices. There are also risks related to currency
exchange ratios, management and control systems, historical losses and
uncertainties about the future profitability of Talvivaara, dependence on key
personnel, effect of laws, governmental regulations and related costs,
environmental hazards, and risks related to Talvivaara's mining concessions and
permits.
Personnel
Recruitment of new qualified personnel continued to be a significant challenge
in 2008, as the total number of employees increased from 64 to 239. Recruitment
processes were implemented in close cooperation with the Kainuu Employment and
Economic Development Centre. Two training programmes tailored for Talvivaara's
specific needs were used to train production drillers, crusher operators and
process workers. All trainees who completed the course were offered a job at the
Talvivaara mine. Most of the recruited personnel were hired locally from the
Kainuu region.
Talvivaara promotes diversity when recruiting new personnel. As the operations
are ramped up in a relatively short span of time, special attention has been
given to creating as diverse a workforce as possible, as regards gender, age and
work experience of employees, and yet maintaining high standard of
qualifications.
The average age of Talvivaara's personnel is 38.5 years. The age distribution of
employees is comparable to the industry average in Finland.
Social and economic impact of the project
Talvivaara has had a major positive impact for the whole Kainuu region in
Eastern Finland. The construction project created numerous new jobs both
directly and indirectly, and at the peak of the construction phase the
unemployment rate in the region fell to a historical low of 11.4%.
Besides contributing to the general increase in prosperity in the Kainuu region
and boosting the service industries in the area, Talvivaara has also had a
positive effect on a cluster of companies operating in the metals and mining and
infrastructure sectors. In connection with the construction project, many
companies obtained their largest ever orders for equipment or contracting, and
several contractors have further passed on substantial amounts of work to local
subcontractors in their respective regions. In total, the construction project
has been estimated to have created work amounting to 3,500 person years.
All through the project, Talvivaara has enjoyed good cooperation with local and
national authorities relating, amongst others, to recruiting, training and
permitting.
Shares and shareholders
The number of shares issued and outstanding in 2008 was 222,896,718. As a result
of the convertible bond of 14 May 2008 and the Option Scheme of 2007, the
authorised fully diluted share capital of the company amounted at the end of
2008 to 241,391,018 shares.
As at 31 December 2008, the shareholders who held more than 5% of the shares and
votes of Talvivaara were Pekka Perä (25.59%), Varma Mutual Pension Insurance
Company (8.57%) and Norilsk Nickel Holdings Ltd. (5.46%).
Share options
By resolution passed at the general meeting of shareholders on 28th February
2007, the Company resolved to issue stock options gratuitously to the key
personnel of the Company and its subsidiaries entitling, after the split of the
Company's shares 1:70, to subscribe for a maximum of 6,999,300 new shares in the
Company (2007 Option Scheme). Pursuant to the terms and conditions of the 2007
Option Scheme, the Board of Directors shall decide upon the distribution of the
stock options.
During 2008, the Board of Directors, based on the recommendation of the
Remuneration Committee, allocated 2,214,000 2007B Options, giving an entitlement
to subscribe for a total of 2,214,000 new shares in the Company, to the
personnel of Talvivaara and its subsidiaries (excluding options granted to the
Directors and members of the Executive Committee). Of the options allocated
during 2007 and 2008, 56,500 2007A Options entitling to subscribe in aggregate
for 56,500 shares were returned back to the Company during 2008. As no 2007A
Options or 2007C Options were allocated during the year, the number of options
available for allocation under the 2007 Option Scheme was at the end of 2008 as
follows: 104,600 2007A Options, 119,100 2007B Options and 2,333,100 2007C
Options. The voting rights of the shares to be issued against the outstanding
share options amount to 2.0 % of the total share capital.
Events after the review period
The first lot of 100 tonnes of nickel sulphide was shipped to Talvivaara's
off-take partner Norilsk Nickel Harjavalta Oy on 19 February 2009, marking the
commencement of commercial scale production at Talvivaara. Further shipments of
increasing quantities in accordance with the progressing ramp-up are planned
from March 2009 onwards.
Finnvera Plc, a specialised financing company owned by the State of Finland, has
approved the grant of an nine-year investment and working capital facility in
the maximum amount of EUR 50 million to Talvivaara Project Ltd. The facility
will be secured by the second-ranking security over the material project assets
of and the shares, held by Talvivaara, in Talvivaara Project Ltd, as well as by
the parent company guarantee issued by the Company.
Modification work on Talvivaara's existing secondary and tertiary crushing
circuit has continued during the first two months of 2009. Although the capacity
of the system has further improved as a result, the Company has resolved to
acquire additional crushing capacity, anticipated to be operational during the
summer of 2009, to secure sufficient capacity in the long term and to help the
Company reach its 2009 production target of 15,000-18,000 tonnes of nickel.
The additional crushing gear will be designed to allow a total capacity increase
of up to 50% over the presently planned production level of 33,000 tonnes of
nickel per annum. The investment can thus be considered a first step towards the
capacity increase, however no decision to take any other necessary measures for
the overall capacity increase has yet been made due to the prevailing market
situation.
The board of Talvivaara has sanctioned a more detailed planning of a potential
secondary listing of Talvivaara's shares on the main list of NASDAQ OMX
Helsinki. Although no decision on the submission of a listing application to
NASDAQ OMX Helsinki has been made, it is expected that the secondary listing in
Helsinki could take place in late March or early April 2009.
Short-term outlook
The visibility on the base metals markets remains poor for the time being, with
price and demand development unpredictable and affected by the global economic
downturn. Although the present price level of nickel is unlikely to be
sustainable as based on industry costs of production globally, Talvivaara does
not expect any substantial increase in the price during the first half of 2009,
as demand, primarily driven by the stainless steel industry, has not yet shown
notable signs of improvement.
The present levels of nickel and zinc price and the euro/US dollar exchange rate
are sufficient to support Talvivaara's profitability during steady-state
operation. However, in order to secure sufficient liquidity during the ongoing
ramp-up period, the Company has deferred all capital expenditure which is not
necessary for the planned production in 2009 and 2010.
Board of Directors proposal for profit distribution
The Board of Directors is proposing to the Annual General Meeting to be held on
28 April 2009 that no dividend is declared in respect of the year 2008.
+-------------------------------------+----------+---------------------------+------------+---------------+--+
| CONSOLIDATED BALANCE SHEET | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| (all amounts in EUR) | | 2008 | | 2007 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| ASSETS | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Non-current assets | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Property, plant and equipment | | 552,458,488 | | 129,718,177 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Biological assets | | 8,151,976 | | 9,048,538 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Intangible assets | | 7,774,274 | | 6,202,032 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Derivative financial instruments | | 116,004,051 | | 9,830,966 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Other receivables | | 9,635,067 | | 29,651,794 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | 694,023,856 | | 184,451,507 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Current assets | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Inventories | | 31,691,267 | | - |
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Other receivables | | 24,720,816 | | 11,352,710 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Available-for-sale financial assets | | - | | 26,965,327 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Derivative financial instruments | | 40,805,085 | | 779,323 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Cash and cash equivalent | | 82,712,894 | | 126,500,712 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | 179,930,062 | | 165,598,072 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Total assets | | 873,953,918 | | 350,049,579 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| EQUITY AND LIABILITIES | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Equity attributable to equity holders of the parent | |
+----------------------------------------------------------------------------+----------------------------+
| Share capital | | 80,000 | | 15,624 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Share premium | | 8,085,842 | | 8,085,842 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Other reserves | | 334,019,317 | | 321,777,699 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Hedge reserve | | 72,331,512 | | - |
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Retained earnings | | (26,101,314) | | (33,422,978) |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | 388,415,357 | | 296,456,187 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Minority interest in equity | | 35,470,287 | | 18,590,725 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Total equity | | 423,885,644 | | 315,046,912 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Non-current liabilities | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Borrowings | | 367,955,043 | | 1,405,000 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Derivative financial instruments | | 1,985,292 | | - |
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Deferred tax liabilities | | 23,069,639 | | 5,326,885 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Provisions | | 944,174 | | 32,401 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | 393,954,148 | | 6,764,286 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Current liabilities | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Borrowings | | 224,384 | | 24,600 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Trade payables | | 45,283,508 | | 25,982,941 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Other payables | | 8,293,848 | | 2,230,840 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Derivative financial instruments | | 2,278,697 | | - |
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Provisions | | 33,689 | | - |
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | 56,114,126 | | 28,238,381 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Total liabilities | | 450,068,274 | | 35,002,667 |
+-------------------------------------+----------+---------------------------+------------+------------------+
| | | | | |
+-------------------------------------+----------+---------------------------+------------+------------------+
| Total equity and liabilities | | 873,953,918 | | 350,049,579 |
+-------------------------------------+----------+---------------------------+------------+---------------+--+
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+
| CONSOLIDATED INCOME STATEMENT | | | | |
+-----------------------------------------------------------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| (all amounts in EUR) | | 2008 | | 2007 | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Turnover | | - | | - | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Other operating income | | 29,809,709 | | 13,563,766 | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Changes in inventories of | | 24,006,023 | | - | | | | |
| finished goods and work | | | | | | | | |
| in progress | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Materials and services | | (20,407,264) | | (2,212,618) | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Employee benefit expenses | | (8,909,663) | | (3,986,882) | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Depreciation, | | (5,756,289) | | (761,404) | | | | |
| amortization, depletion | | | | | | | | |
| and impairment charges | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Other operating expenses | | (23,038,642) | | (4,270,940) | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Operating profit (loss) | | (4,296,126) | | 2,331,922 | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Finance income | | 9,219,704 | | 4,265,806 | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Finance cost | | (12,956,264) | | (11,506,191) | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Finance cost (net) | | (3,736,560) | | (7,240,385) | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Loss before income tax | | (8,032,686) | | (4,908,463) | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Income tax expense | | 13,864,869 | | (5,019,933) | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Profit (loss) for the | | 5,832,183 | | (9,928,396) | | | | |
| year | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Attributable to: | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Equity holders of the | | 7,042,651 | | (9,383,804) | | | | |
| Company | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Minority interest | | (1,210,468) | | (544,592) | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | 5,832,183 | | (9,928,396) | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Earnings per share for | | | | | | | | |
| profit (loss) | | | | | | | | |
| attributable to the | | | | | | | | |
| equity holders of the | | | | | | | | |
| Company (expressed in EUR | | | | | | | | |
| per share) | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| Basic and diluted | | 0.03 | | (0.06) | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
| | | | | | | | | |
+---------------------------+-+----------------+-+----------------+-+------------+-+-+
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| all amounts in EUR) | Attributable to equity holders of the Company | | |
+---------------------+--------------------------------------------------------------------------------------------+-------------+--------------+
| | Share | Share | Invested | Hedge | Other | Retained | Total | Minority | Total |
| |capital | premium |unrestricted | reserve | reserves | earnings | | interest | equity |
| | | | equity | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Balance at 1 | 1, 715 |2,755,433 | 825,020 | - | 511,045 | (4,991,395) | (887,182) | 87,538 | (799,644) |
| January 2007 | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Fair value changes | - | - | - | - | 323,619 | - | 323,619 | - | 323,619 |
| net of tax on | | | | | | | | | |
| available-for-sale | | | | | | | | | |
| financial assets | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| External costs, net | - | - |(16,901,873) | - | - | - |(16,901,873) | - |(16,901,873) |
| of tax, directly | | | | | | | | | |
| attributable to the | | | | | | | | | |
| issue of new shares | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Net | - | - |(16,901,873) | - | 323,619 | - |(16,578,254) | - |(16,578,254) |
| income/(expense) | | | | | | | | | |
| recognized directly | | | | | | | | | |
| in equity | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Loss for the year | - | - | - | - | - | (9,383,804) | (9,383,804) | (544,592) | (9,928,396) |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Total recognised | - | - |(16,901,873) | - | 323,619 | (9,383,804) |(25,962,058) | (544,592) |(26,506,650) |
| income and expense | | | | | | | | | |
| for 2007 | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Transactions | - | - | - | - | - |(19,047,779) |(19,047,779) | (953,820) |(20,001,599) |
| related with the | | | | | | | | | |
| sale of Talvivaara | | | | | | | | | |
| Project shares | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Issue of new shares | - | - | 302,056,012 | - | - | - | 302,056,012 | - | 302,056,012 |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Employee share | | | | | | | | | |
| option scheme | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| - value of employee | - | - | - | - | 271,383 | - | 271,383 | - | 271,383 |
| services | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Convertible capital | | | | | | | | | |
| loan | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| - conversion into | 2,909 |5,330,409 | - | - | - | - | 5,333,318 | - | 5,333,318 |
| shares | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Convertible bond | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| - conversion into | - | - | 34,692,493 | - | - | - | 34,692,493 | - | 34,692,493 |
| shares | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Minority interest | - | - | - | - | - | - | - | 20,001,599 | 20,001,599 |
| arising from | | | | | | | | | |
| subsidiary | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Balance at 31 | 15,624 |8,085,842 | 320,671,652 | - | 1,106,047 |(33,422,978) | 296,456,187 | 18,590,725 | 315,046,912 |
| December 2007 | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Balance at 1 | 15,624 |8,085,842 | 320,671,652 | - | 1,106,047 |(33,422,978) | 296,456,187 | 18,590,725 | 315,046,912 |
| January 2008 | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Fair value changes | - | - | - | - | (450,959) | - | (450,959) | - | (450,959) |
| net of tax on | | | | | | | | | |
| available-for-sale | | | | | | | | | |
| financial assets | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Changes in the fair | | | |72,331,512 | | - | 72,331,512 | - | 72,331,512 |
| value of cash flow | | | | | | | | | |
| hedges, net of tax | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Net | - | - | - |72,331,512 | (450,959) | - | 71,880,553 | - | 71,880,553 |
| income/(expense) | | | | | | | | | |
| recognized directly | | | | | | | | | |
| in equity | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Profit for the year | - | - | - | - | - | 7,042,651 | 7,042,651 |(1,210,468) | 5,832,183 |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Total recognised | - | - | - |72,331,512 | (450,959) | 7,042,651 | 78,923,204 |(1,210,468) | 77,712,736 |
| income and expense | | | | | | | | | |
| for 2008 | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Transfers within | 64,376 | - | (64,376) | - | - | - | - | - | - |
| equity, change of | | | | | | | | | |
| the corporate form | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Convertible bond, | - | - | - | - |10,893,654 | - | 10,893,654 | - | 10,893,654 |
| equity component | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Employee share | | | | | | | | | |
| option scheme | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| - value of employee | - | - | - | - | 1,863,299 | - | 1,863,299 | - | 1,863,299 |
| services | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Restatement to | - | - | - | - | - | 278,165 | 278,165 | - | 278,165 |
| capital | | | | | | | | | |
| expenditure, which | | | | | | | | | |
| relates to last | | | | | | | | | |
| year | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Minority interest | - | - | - | - | - | 848 | 848 | 18,090,030 | 18,090,878 |
| arising from | | | | | | | | | |
| subsidiary | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
| Balance at 31 | 80,000 |8,085,842 | 320,607,276 |72,331,512 |13,412,041 |(26,101,314) | 388,415,357 | 35,470,287 | 423,885,644 |
| December 2008 | | | | | | | | | |
+---------------------+---------+-----------+--------------+------------+------------+--------------+--------------+-------------+--------------+
CONSOLIDATED CASH FLOW STATEMENT
+--+-----------------------------------------------+------------------------------+-----------------------+
| (all amounts in EUR) | 2008 | 2007 |
+--------------------------------------------------+------------------------------+-----------------------+
| Cash flows from operating activities | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Profit (loss) for the year | 5,832,183 | (9,928,396) |
+--------------------------------------------------+------------------------------+-----------------------+
| Adjustments for | | |
+--------------------------------------------------+------------------------------+-----------------------+
| | Tax | (13,864,869) | 5,019,933 |
+--+-----------------------------------------------+------------------------------+-----------------------+
| | Depreciation and amortization | 5,756,289 | 761,404 |
+--+-----------------------------------------------+------------------------------+-----------------------+
| | Other non-cash income and expenses | 4,780,348 | 12,031,672 |
+--+-----------------------------------------------+------------------------------+-----------------------+
| | Interest income | (9,219,704) | (4,265,806) |
+--+-----------------------------------------------+------------------------------+-----------------------+
| | Fair value gains on financial assets at fair | (24,796,562) | (9,830,966) |
| | value through profit or loss | | |
+--+-----------------------------------------------+------------------------------+-----------------------+
| | Interest expense | 12,956,264 | 11,506,191 |
+--+-----------------------------------------------+------------------------------+-----------------------+
| | | (18,556,051) | 5,294,032 |
+--+-----------------------------------------------+------------------------------+-----------------------+
| Change in working capital | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Decrease(+)/increase(-) in other receivables | 5,582,124 | (32,049,753) |
+--------------------------------------------------+------------------------------+-----------------------+
| Decrease (+)/increase (-) in inventories | (31,691,267) | - |
+--------------------------------------------------+------------------------------+-----------------------+
| Decrease(-)/increase(+) in trade and other | 23,773,390 | 25,667,182 |
| payables | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Change in working capital | (2,335,753) | (6,382,571) |
+--------------------------------------------------+------------------------------+-----------------------+
| | | | |
+--+-----------------------------------------------+------------------------------+-----------------------+
| | | (20,891,804) | (1,088,539) |
+--+-----------------------------------------------+------------------------------+-----------------------+
| | | | |
+--+-----------------------------------------------+------------------------------+-----------------------+
| Interest and other finance cost paid | (7,468,121) | (30,696,605) |
+--------------------------------------------------+------------------------------+-----------------------+
| Interest income | 9,581,237 | 4,162,026 |
+--------------------------------------------------+------------------------------+-----------------------+
| | | | |
+--+-----------------------------------------------+------------------------------+-----------------------+
| Net cash used in operating activities | (18,778,688) | (27,623,118) |
+--------------------------------------------------+------------------------------+-----------------------+
| | | | |
+--+-----------------------------------------------+------------------------------+-----------------------+
| Cash flows from investing activities | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Purchases of property, plant and equipment | (427,187,205) | (126,547,258) |
+--------------------------------------------------+------------------------------+-----------------------+
| Purchases of biological assets | (25,755) | (5,688,860) |
+--------------------------------------------------+------------------------------+-----------------------+
| Purchases of intangible assets | (1,872,969) | (1,903,190) |
+--------------------------------------------------+------------------------------+-----------------------+
| Proceeds from sale of biological assets | 706,871 | 527,712 |
+--------------------------------------------------+------------------------------+-----------------------+
| Proceeds from government grant related to | 203,826 | 458,824 |
| intangible assets | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Purchases of available for sale financial assets | - | (24,000,000) |
+--------------------------------------------------+------------------------------+-----------------------+
| Proceeds from sale of available for sale | 26,355,923 | 20,009, 281 |
| financial assets | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Purchases of derivative financial instruments | (1,370,918) | (951,873) |
+--------------------------------------------------+------------------------------+-----------------------+
| Purchases of financial assets at fair value | - | (104 ,000,000) |
| through profit or loss | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Proceeds from sale of financial assets at fair | 1,439 ,598 | 109,000,000 |
| value through profit or loss | | |
+--------------------------------------------------+------------------------------+-----------------------+
| | | | |
+--+-----------------------------------------------+------------------------------+-----------------------+
| Net cash used in investing activities | (401,750,629) | (133,095,364) |
+--------------------------------------------------+------------------------------+-----------------------+
| | | | |
+--+-----------------------------------------------+------------------------------+-----------------------+
| Cash flows from financing activities | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Proceeds from share issue net of transaction | - | 285,154,139 |
| costs | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Proceeds from interest-bearing liabilities | 396,733,499 | 20,281,000 |
+--------------------------------------------------+------------------------------+-----------------------+
| Payment of interest-bearing liabilities | (20,000,000) | (20,000,000) |
+--------------------------------------------------+------------------------------+-----------------------+
| Capital investment by minority shareholders | 8,000 | - |
+--------------------------------------------------+------------------------------+-----------------------+
| Net cash generated in financing activities | 376,741,499 | 285,435,139 |
+--------------------------------------------------+------------------------------+-----------------------+
| Net (decrease)/increase in cash and bank | (43,787,818) | 124,716,657 |
| overdrafts | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Cash and bank overdrafts at beginning of the | 126,500,712 | 1,784,055 |
| year | | |
+--------------------------------------------------+------------------------------+-----------------------+
| Cash and bank overdrafts at end of the year | 82,712,894 | 126,500,712 |
+--+-----------------------------------------------+------------------------------+-----------------------+
CALCULATION OF KEY FIGURES
+----------------------------------+-----------------------------------------------------+
| Key financial figures of the | |
| Group | |
+----------------------------------+-----------------------------------------------------+
| Return on equity | Profit (loss) for the year |
+----------------------------------+-----------------------------------------------------+
| | (Total equity 1 January + Total equity 31 |
| | December)/2 |
+----------------------------------+-----------------------------------------------------+
| | |
+----------------------------------+-----------------------------------------------------+
| Equity-to-assets ratio | Total equity |
+----------------------------------+-----------------------------------------------------+
| | Total assets |
+----------------------------------+-----------------------------------------------------+
| | |
+----------------------------------+-----------------------------------------------------+
| Net interest-bearing debt | Interest-bearing debt - Cash and cash equivalent |
+----------------------------------+-----------------------------------------------------+
| | |
+----------------------------------+-----------------------------------------------------+
| Debt-to-equity ratio | Net interest-bearing debt |
+----------------------------------+-----------------------------------------------------+
| | Total equity |
+----------------------------------+-----------------------------------------------------+
| Share-related key figures | |
+----------------------------------+-----------------------------------------------------+
| | |
+----------------------------------+-----------------------------------------------------+
| Earnings per share | Profit (loss) attributable to equity holders of the |
| | Company |
+----------------------------------+-----------------------------------------------------+
| | Adjusted average number of shares |
+----------------------------------+-----------------------------------------------------+
| | |
+----------------------------------+-----------------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IFFSFVTIVIIA
Talvivaara (LSE:TALV)
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