TALV Talvivaara

 

TIDMTALV 
 
RNS Number : 2542R 
Talvivaara Mining Company PLC 
28 April 2009 
 

Talvivaara Mining Company Plc 
Stock Exchange Release 28 April 2009 
 
 
 
 
Interim Management Statement for the period of 1 January - 27 April 2009 
 
 
First nickel sulphides delivered to Norilsk Nickel Harjavalta 
Materials handling systems to be upgraded to deal with delays with crushing 
 
and to facilitate production expansion 
 
 
 
 
Highlights 
 
 
  *  First shipment of nickel sulphide to Norilsk Nickel Harjavalta was sent on 19 
  February 2009 
  *  Mining, leaching and metals recovery processes are functioning well 
  *  Crushing capacity has continued to remain substantially below budgeted levels 
  for the year to date, but is expected to significantly improve during the second 
  half of the year 
  *  Our most recent analysis leads us to believe that it is unlikely that previously 
  stated nickel production targets for 2009 are met, reflecting the reduced levels 
  of crushing to date 
  *  Agreement has been reached with Sandvik for the delivery and financing of 
  additional crushing equipment to increase crushing capacity from September 2009 
  by approximately 45% to 22 million tonnes per annum 
  *  Safety at the mine site remained good with 5 minor lost time injuries during the 
  period; there have been no LTI's since the launch of the Work Group Safety 
  Challenge at the beginning of February 2009 
  *  The number of employees at Talvivaara increased from 239 at the end of 2008 to 
  272 on 27 April 2009; recruitment will continue throughout the ramp-up period 
  during the remainder of the year 
  *  First EUR 20 million of the EUR 50 million investment and working capital loan 
  from Finnvera Plc was drawn down in two instalments on 17 and 23 April 2009 
  *  The Company continues to have sufficient facilities in place to execute its 
  original ramp up plans despite the delay 
  *  The production target for 2010 of 30,000t remains unchanged; plans for 
  production expansion to 45 thousand tonnes of nickel in 2011 and 50 thousand 
  tonnes in 2012 are under preparation 
 
 
 
Talvivaara's CEO, Pekka Perä comments: 
 
 
"I am very pleased to have seen our first shipment of nickel and zinc sulphides 
been made, which is a major milestone. Having received invoices for several 
years now, it is gratifying to now be able to send them ourselves. 
 
With 
all the other main areas of work on the production ramp-up functioning well, it 
has been frustrating to have our production ramp-up delayed by difficulties with 
crushing capacity. With regard to the crushing issue, we have now come to the 
conclusion that in order to secure our overall production capacity in the long 
term, it is time to invest in additional crushing capacity as soon as possible. 
We are working on the expansion of crushing in close partnership with Sandvik 
with whom we have agreed a detailed implementation timetable. 
 
 
Our main focus remains the ramp-up process and maintaining Talvivaara's position 
as a low cost metal producer. We intend to ensure we are in a position to catch 
up by the summer of 2010 on the crushing volumes lost this year. However, due to 
the process related delay from crushing to the actual metals production, the 
production target for 2010 of 30,000t remains unchanged. Our plans for 
production expansion now include output of 45 thousand tonnes of nickel in 2011 
increasing to 50 thousand tonnes in 2012, with final decisions on the expansion 
pending financing arrangements, but expected still this year." 
 
 
 
 
Key events during the reporting period: 
 
First nickel sulphides shipped to Norilsk Nickel - ramp-up continues 
 
The first shipment of approximately 100 tonnes of nickel product was sent on 19 
February 2009 from the Talvivaara mine to the Norilsk Nickel Harjavalta 
refinery, marking the beginning of saleable quantity and quality metals 
production at Talvivaara. The 450 tonnes of zinc sulphide obtained from the 
first production campaign was sold as a spot sale. 
 
 
The second metal sulphide production campaign started on 22 April 2009 and is 
estimated will continue until mid to late May. 
 
 
Mining and bioheapleaching processes progressed as planned during the period. 
The increase in overall production volumes continued to be limited by crushing 
capacity. 
 
 
Materials handling systems to be upgraded to catch up on delay with crushing 
 
 and to facilitate production expansion 
 
 
Further amendments to Talvivaara's fine crushing circuit were made during the 
first quarter of the year in order to achieve the name plate capacity of the 
system. As a result, the performance of the circuit has improved and around 80% 
of the targeted capacity can now be consistently achieved. However, the first 
quarter of 2009 fell approximately 50% short of the production target due to 
deficient system performance and production stoppages for the amendment works. 
 
 
In order to secure sufficient capacity in the long term and to catch up the 
already incurred crushing delay by Q3 2010, Talvivaara has decided to redesign 
the entire crushing system and to acquire additional crushing equipment with 
expected availability for use in September 2009. The Company has reached 
agreement with Sandvik Mining and Construction Oy on corrective actions required 
for the original crushing and screening line, the delivery of additional 
crushing capacity, and on financing of the additional supply. The scope of the 
additional supply will be such that, together with the existing gear in a 
redesigned circuit, it enables steady state crushing capacity at approximately 
22 million tonnes per annum. This represents a 45% increase over the presently 
planned capacity and functions therefore as a first step towards the planned 
overall production expansion. 
 
 
Modifications required for the increased capacity in the subsequent process 
stages, agglomeration and stacking, have already been defined and are under 
preparation. 
 
 
Personnel and safety 
 
 
Talvivaara Group's personnel increased from 239 at the start of the reporting 
period to 272 by the date of this statement. The growth in personnel stemmed 
primarily from the recruitment of maintenance personnel and operators for 
various production processes. Recruitment of personnel will continue throughout 
the ramp-up period during the remainder of the year. 
 
 
By the end of the reporting period, the number of contractor personnel at the 
mine site had reduced to approximately 200, indicating that the construction 
project is nearing its completion. During the summer of 2009 the preparations 
for and installation of the additional crushing circuit will temporarily 
increase the number of contractor workforce. At steady state production, the 
number of contractor personnel on site is anticipated to be approximately 100. 
 
 
During the reporting period there were 5 lost time injuries on site. Of these, 
three occurred to Talvivaara's own personnel. No lost time injuries have been 
reported after the Company launched a continuous Work Group Safety Challenge in 
the beginning of February 2009. 
 
 
Investment and working capital loan from Finnvera Plc 
 
 
The first EUR 20 million of the EUR 50 million investment and working capital 
loan from Finnvera Plc was drawn down in two instalments on 17 and 23 April 
2009.The loan is intended to cover Talvivaara's financing needs during the 
ramp-up period in 2009. Repayments of the loan are scheduled to start in 
December 2013. 
 
 
Talvivaara continues to have facilities in place to finance the original ramp-up 
despite the production delays caused by technical difficulties in materials 
handling. 
 
 
Market environment 
 
 
The base metals markets have continued to be challenging during the first months 
of 2009. The spot prices of nickel and zinc have recently been around USD 
11,000-12,000 per tonne and USD 1,300-1,500 per tonne, respectively, which is 
20-30% above the prices seen in the early part of the year. The demand for base 
metals has not yet markedly improved, however, indicating that no significant 
improvement in market prices can be expected in the short term. 
 
 
Short term outlook 
 
 
Crushing problems have affected production levels in the early part of the year 
but the upcoming installation of additional crushing capacity should mean that 
whilst output during the first half of the year will be substantially below the 
budgeted level, production levels will significantly improve during the latter 
half. The exact timing and length of the production stoppage required for the 
installation of the new crushing gear is not yet known. However, overall, it is 
unlikely that the previously stated production targets for 2009 will be 
achieved. Crushing volumes lost this year are anticipated to be caught up by Q3 
2010, while metals production potentially lost this year is anticipated to be 
caught up in 2011 at the latest. 
 
 
Due to the technical challenges experienced in crushing, the Company has 
continued to review both capital and operational expenditure with the goal of 
minimising costs during 2009. Operational expenditure is largely dependent on 
the eventual production volume, but savings are in any case expected to be 
achieved through lower than budgeted consumables prices. Some freight costs will 
also be deferred, as Norilsk Nickel has informed Talvivaara of a delay in the 
completion of the facilities being built for the Talvivaara product. Due to this 
delay, it has been agreed that Talvivaara will only ship further amounts of 
nickel sulphide to Norilsk Nickel from August 2009 onwards. All amounts produced 
prior to that time will however be invoiced upon production and paid by Norilsk 
Nickel in accordance with the terms of the off-take agreement. 
 
 
With the additional crushing capacity already committed, Talvivaara continues to 
investigate possibilities to also commit to an overall capacity increase of 
40-45% over the presently planned level of 33,000 tonnes of nickel per annum. 
Negotiations are ongoing relating to the supply and financing of the necessary 
modifications to the metals plant and of the required earth works. Subject to 
financing arrangements being available, the Company is prepared to pursue the 
capacity increase during the current year. 
 
 
 
 
 
 
 
 
 
 
There will be a conference to discuss the statement on 28 April 2009 at 11.00 
(UK)/13.00 (Finland). 
 
 
Details to access the conference call are as follows: 
UK Free Call: 0800 694 0257 
UK Standard International: +44 (0) 1452 555 566 
USA Free Call: 1866 966 9439 
Finland Free Call: 0800 112 363 
 
 
and the conference ID is 97353284 
A replay facility will be available on the following numbers until 5 May 2009: 
Replay Access Number: 97353284# 
International Dial in: +44 (0) 1452 55 00 00 
UK Free Call Dial In: 0800 953 1533 
UK Local Dial In: 0845 245 5205 
USA Free Call Dial In: 1866 247 4222 
 
 
 
 
 
 
Enquiries: 
 
 
Talvivaara Mining Company Plc Tel. +358 20 7129 800 
Pekka Perä 
Saila Miettinen-Lähde 
 
 
Merlin Tel: +44 207 653 6620 
 Tom Randell 
 Anca Spiridon 
Note: The information presented in this release is unaudited. 
 
 
About Talvivaara Mining Company Plc. 
Talvivaara is a Finnish mining company operating a large open pit nickel mine in 
Sotkamo, Finland. Talvivaara aims to become an internationally significant base 
metals producer with its primary focus on nickel and zinc using a technology 
known as bioheapleaching to extract metals out of ore. Bioheapleaching makes 
extraction of metals from low grade ore economically viable. The Talvivaara 
deposits comprise one of the largest known sulphide nickel resources in Europe. 
The ore body is sufficient to support anticipated production for over 60 years. 
The Company has secured a 10-year off-take agreement for 100 per cent of its 
main output of nickel and cobalt to Norilsk Nickel. Talvivaara is listed on the 
London Stock Exchange Main Market and is included in the FTSE 250 Index. Further 
information can be found at www.talvivaara.com 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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