Stock
Exchange Release
Talvivaara Mining Company
Plc
14 February 2013
NOT FOR
RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR
INTO THE UNITED STATES, CANADA, AUSTRALIA, HONG KONG, SOUTH AFRICA
OR JAPAN OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR
RELEASE WOULD BE UNLAWFUL.
THIS
ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS
SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SHARES OR SECURITIES
REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF INFORMATION
IN THE APPLICABLE PROSPECTUS WHICH, SUBJECT TO APPROVAL FROM THE
FINNISH FINANCIAL SUPERVISORY AUTHORITY, IS EXPECTED TO BE
PUBLISHED BY TALVIVAARA IN CONNECTION WITH THE RIGHTS ISSUE. COPIES
OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION AND DISTRIBUTION, BE
AVAILABLE FROM TALVIVAARA'S REGISTERED OFFICE.
Proposed EUR
260 million Rights Issue
Talvivaara Mining Company Plc
("Talvivaara" or the "Company") today announces a proposal to raise
gross proceeds of EUR 260 million through a rights issue.
Highlights
- The proposed rights issue aims
to:
-
Secure liquidity for continued ramp-up of
operations towards full capacity;
-
Provide an appropriate capital structure to
enable refinancing or repayment of short-term and medium-term
indebtedness, including the convertible bonds due in May 2013;
and
-
Satisfy a condition subsequent under an amended
revolving credit facility
- Underwritten through a
combination of irrevocable subscription commitments from Pekka
Perä, Solidium and Varma, and standby underwriting commitments from
J.P. Morgan Securities plc, Nordea Bank Finland Plc, BofA Merrill
Lynch, BNP PARIBAS and Danske Bank A/S Helsinki Branch
- Amended revolving credit facility
for EUR 100 million (of which EUR 70 million is drawn), which,
among other things, amends the financial and production covenants
in the previous credit facility to reflect Talvivaara's current
business
-
Talvivaara is convening an Extraordinary General
Meeting expected to take place on 8 March 2013 in order to obtain a
resolution authorising the Board to issue up to 26 billion new
shares in the rights issue
-
Interim financing arrangements agreed with
Nyrstar and Cameco amounting to EUR 12 million and USD 10 million,
respectively
-
Talvivaara's annual results review as well as
the financial statements and the related review of the Board for
the financial year ended 31 December 2012 has also been released
today
Tapani
Järvinen, Chairman of Talvivaara, said:
"While
Talvivaara has encountered a number of significant challenges
recently, reflected in the Company's current liquidity position and
the necessity of the proposed capital raise, the Board is confident
in Talvivaara's long-term potential, with its significant sulphide
nickel resources and cost effective bioheapleaching process
following ramp-up, and in the long-term fundamentals of the nickel
industry.
However, the
production challenges suffered over the course of 2012 have
underlined the need to focus on stabilising and improving
Talvivaara's production processes in order to return to a
sustainable ramp-up towards the targeted full capacity of 50,000
tonnes of nickel per year. Talvivaara is implementing a number of
measures to resolve its near-term operational challenges, but the
full effect of these actions will only materialise over time.
Through the financing transactions announced today, we are putting
in place a strong capital structure to allow Talvivaara to overcome
its prevailing challenges and continue the successful ramp-up of
its operations.
Furthermore, the
production shortfalls Talvivaara has experienced combined with a
weak nickel price environment have resulted in a strained liquidity
position, which the Board expects to be further exacerbated in 2013
due to the production impact caused by the prevailing water balance
issues. The Board therefore believes that Talvivaara will need to
strengthen its liquidity position to secure sufficient working
capital and enable repayment or refinancing of short-term and
medium-term indebtedness, including the convertible bonds due in
May 2013.
Notwithstanding
prevailing operational challenges and the work required to overcome
them, the Board remains confident of Talvivaara's future as a
Finnish mining champion of international significance. The primary
focus of the Board continues to be on preserving and enhancing
value for all Talvivaara's shareholders. We are confident the
proposed EUR 260 million rights issue is in the best interests of
the Company's shareholders as a whole."
Background
and reasons for the rights issue
Talvivaara has faced a number of
operational challenges during the ramp-up of its operations. These
challenges have resulted in Talvivaara not achieving its original
production targets for 2010, 2011 and 2012. In particular, over the
course of 2012, Talvivaara faced increasing challenges with the
water balance of the mine, as rapid snow melting in the spring and
historically heavy rainfall in the spring and summer materially
increased the amount of excess water that had been accumulating at
the mine site. The challenging water balance forced Talvivaara to
temporarily cease the production of new ore as of September 2012,
diluted metal grades in leach solution leading to reduced metals
production and culminated in a leakage of the gypsum pond in
November 2012.
These issues have underlined the
need to focus on stabilising and improving Talvivaara's production
processes in order to return to a sustainable ramp-up path towards
the targeted full capacity of 50,000 tonnes of nickel per year.
Talvivaara's results of operations in 2012 were further negatively
affected by the prevailing low nickel price environment. The Board
believes that Talvivaara's strained liquidity position is likely to
be exacerbated in 2013 by the production impact caused by the
prevailing water balance issues as well as the maturity of the
remaining EUR 76.9 million convertible bonds due in May 2013.
Talvivaara is implementing a
number of measures to overcome its near-term operational
challenges, including:
-
Removing excess water from the Talvivaara mine
site;
-
Implementing steps to achieve a closed water
circulation system;
-
Improving bioheapleaching performance; and
-
Further improving and maintaining the stability
already achieved across Talvivaara's production processes.
However, the full effect of these
actions will only materialise over time, and Talvivaara currently
expects material production ramp-up only from the second half of
2013. With prevailing nickel price uncertainty and expected
short-term production volumes, Talvivaara believes that it will
need to strengthen its liquidity position to secure sufficient
working capital and enable repayment or refinancing of short-term
and medium-term indebtedness, including the convertible bonds due
2013.
Talvivaara has concluded that
raising additional equity is the best approach to secure liquidity
for continued ramp-up of operations towards full capacity and
achieve an appropriate capital structure to enable refinancing or
repayment of short-term and medium-term indebtedness. Receipt of
the proceeds from the proposed rights issue will also satisfy a
condition subsequent under the amended revolving credit facility as
discussed below.
Interim
financing arrangements
In order to ensure that it has
liquidity until it receives the proceeds from the proposed rights
issue, Talvivaara has entered into amendment agreements with Cameco
and Nyrstar. Under the agreement with Cameco, the amount of the
up-front investment that Cameco is to pay to Talvivaara for the
construction of the uranium extraction facility was increased by
USD 10 million to USD 70 million, and the duration of the amendment
agreement extended to 31 December 2017 and commercial terms revised
accordingly. Under the agreement with Nyrstar, Talvivaara receives
an up-front payment of EUR 12 million in return for agreeing not to
charge Nyrstar the EUR 350 per tonne extraction and processing fee
on the next 38,000 tonnes of zinc in concentrate delivered to
Nyrstar as was agreed in the original zinc in concentrate streaming
agreement.
Rights issue
and the amended revolving credit facility
On 13 February 2013, Talvivaara
entered into the amended credit facility agreement, which, among
other things, amends the financial and production covenants in the
previous credit facility agreement to reflect Talvivaara's current
business and, therefore, reduces Talvivaara's risk in relation to
compliance with its covenants.
The proposed rights issue is
conditional upon the Board proposal on the rights issue being
passed by shareholders at the Extraordinary General Meeting.
Therefore, if such resolutions are not passed at the Extraordinary
General Meeting, the proposed rights issue will not proceed. If
Talvivaara does not receive net proceeds of at least EUR 240
million from the proposed rights issue by 30 April 2013, an event
of default would immediately occur under the amended revolving
credit facility agreement. An event of default could cause a
significant portion of Talvivaara's borrowings to become repayable
on demand. Furthermore, without securing additional funds through
the proposed rights issue, Talvivaara will likely run out of cash
and not be able to finance its planned operations or repay its
debts, including the convertible bonds due in May 2013. Such events
may require the sale of the Talvivaara mine, Talvivaara or
Talvivaara's 84 per cent shareholding in Talvivaara Sotkamo, which
owns the Talvivaara mine, and result in the insolvency and,
ultimately, liquidation of the Company.
Underwriting
and subscription commitments
The proposed rights issue is
underwritten through a combination of irrevocable subscription
commitments and standby underwriting.
The Company has received
irrevocable undertakings from its three largest shareholders, Mr
Pekka Perä, Solidium and Varma Mutual Pension Insurance Company, to
vote in favour of the resolutions in respect of 104,181,306 Shares
in aggregate, representing approximately 38.3 per cent of the
shares in issue on the date of this announcement.
Mr Pekka Perä, representing
approximately 20.7 per cent of the shares in issue on the date of
this announcement, has irrevocably committed to subscribe for such
number of new shares based on a total subscription price equal to
(i) EUR 5 million plus (ii) 76 per cent of any net proceeds
received by him from the sale of (A) any subscription rights during
the subscription period of the proposed rights issue and (B) any
shares at any time prior to the end of such subscription period as
well as agreed to a lock-up undertaking with respect to his shares
that will be in force for 90 days after the completion of the
proposed rights issue. Mr Pekka Perä has agreed to use his
reasonable best efforts to raise funds on terms that are reasonably
acceptable to him, whether through borrowing, the sale of shares,
the sale of subscription rights, or other means, in order to
subscribe for new shares in excess of his commitment to subscribe
new shares based on a total subscription price of EUR 5 million
referred to above.
Solidium, representing
approximately 8.9 per cent of the shares in issue on the date of
this announcement, has irrevocably committed to subscribe in full
for new shares on the basis of the subscription rights allocated to
it. In addition, Solidium has agreed to subscribe for any new
shares not otherwise subscribed and paid for pursuant to
subscription rights or in the secondary subscription up to an
aggregate subscription price of EUR 30 million.
Varma Mutual Pension Insurance
Company, representing approximately 8.7 per cent of the shares in
issue on the date of this announcement, has irrevocably committed
to subscribe in full for new shares on the basis of the
subscription rights allocated to it.
J.P. Morgan Securities plc, Nordea
Bank Finland Plc, BofA Merrill Lynch, BNP PARIBAS and Danske Bank
A/S Helsinki Branch have entered into a standby underwriting letter
with Talvivaara pursuant to which they have severally agreed,
subject to certain terms and conditions, to underwrite the portion
of the proposed rights issue that is not subject to such
shareholder commitments. Under the standby underwriting letter, the
Company has agreed to a lock-up undertaking that will be in force
for 180 days after the completion of the proposed rights issue.
Principal
terms of the rights issue
The Board expects that the terms
of the proposed rights issue will be announced on or around 8 March
2013, and the full details of the proposed rights issue, including
the terms, pricing and expected net proceeds of the proposed rights
issue, will be included in a prospectus to be published, subject to
approval by the Finnish Financial Supervisory Authority, on or
around 13 March 2013. Talvivaara expects that the proposed rights
issue will seek to raise approximately EUR 260 million in gross
proceeds.
The subscription price is expected
to be in euros and to be set with reference to a discount to the
theoretical ex-rights price, which will be in line with similar
rights issues undertaken in the UK and Finnish markets, and having
regard to, amongst other things, investor feedback, Talvivaara's
operational performance, market conditions, any relevant
requirements of the Listing Rules and the market price of the
shares over the five days preceding the determination of the
subscription price. The number of new shares to be issued pursuant
to the proposed rights issue will be determined on the date the
Board resolves upon the proposed rights issue on the basis of the
rights issue authorisation having been approved at the
Extraordinary General Meeting and will depend on the subscription
price determined at the same time by the Board. In order for
Talvivaara to proceed with the proposed rights issue, a resolution
authorising the Board to resolve to issue up to 26 billion new
shares in the rights issue will be proposed by the Board at the
Extraordinary General Meeting.
Presentations for the media and investors:
Finnish
language press conference on 14 February 2013 at 10:00 GMT / 12:00
EET
A Finnish language press
conference on the annual results and financing arrangements will be
held on 14 February 2013 at 10:00 GMT / 12:00 EET at G.W. Sundmans
(auditorium), Helsinki, Finland.
English
language presentation and live webcast on 14 February 2013 at 11:30
GMT / 13:30 EET
An English language combined
presentation, conference call and live webcast on the annual
results and financing arrangements will be held on 14 February 2013
at 11:30 GMT / 13:30 EET.
The webcast
can be accessed through the following link:
http://qsb.webcast.fi/t/talvivaara/talvivaara_2013_0214_q4/
A conference call facility is
available for participants joining via telephone and there will be
a Q&A following the presentation.
Listen via
teleconference:
Europe & U.K. Participants: +44 (0)20 7162 0077
US Participants: +1 334 323 6203
Finnish Participants: +358 (0)9 2313 9202
Conference
ID: 928245
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 the end of 2013.
Enquiries
Talvivaara Mining Company Plc Tel
+358 20 7129 800
Pekka Perä, Chief Executive Officer
Saila Miettinen-Lähde, Deputy CEO and CFO
Talvivaara
Mining Company Plc
Talvivaara Mining Company is 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
estimated to support anticipated production for several decades.
Talvivaara has secured a 10-year off-take agreement for 100 per
cent of its main output of nickel and cobalt to Norilsk Nickel and
entered into a long-term zinc streaming agreement with Nyrstar NV.
Talvivaara is listed on the London Stock Exchange Main Market and
NASDAQ OMX Helsinki. Further information can be found at
www.talvivaara.com.
DISCLAIMER
This
announcement is an advertisement and not a prospectus and investors
should not subscribe for or purchase any shares or securities
referred to in this announcement except on the basis of information
in the applicable prospectus which, subject to approval from the
Finnish Financial Supervisory Authority, which are expected to be
published by Talvivaara in connection with the proposed rights
issue. Copies of the prospectus will, following publication and
distribution, be available from Talvivaara's registered office.
Nothing in this announcement should be interpreted as a term or
condition of the proposed rights issue.
The
information contained herein is not for publication or
distribution, directly or indirectly, in or into the United States,
Canada, Australia, Hong Kong, South Africa or Japan. These written
materials do not constitute an offer of securities for sale in the
United States, nor may the securities be offered or sold in the
United States absent registration or an exemption from registration
as provided in the U.S. Securities Act of 1933, as amended, and the
rules and regulations thereunder. There is no intention to register
any portion of the offering in the United States or to conduct a
public offering of securities in the United States.
The issue, exercise or sale
of securities in the offering are subject to specific legal or
regulatory restrictions in certain jurisdictions. Talvivaara
assumes no responsibility in the event there is a violation by any
person of such restrictions.
The information contained
herein shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of the securities
referred to herein in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration,
exemption from registration or qualification under the securities
laws of any such jurisdiction. Investors must neither accept any
offer for, nor acquire, any securities to which this announcement
refers, unless they do so on the basis of the information contained
in the applicable prospectus published or distributed by
Talvivaara.
Talvivaara has not
authorised any offer to the public of securities in any Member
State of the European Economic Area other than Finland and the
United Kingdom. With respect to each Member State of the European
Economic Area other than Finland and the United Kingdom and which
has implemented the Prospectus Directive (each, a "Relevant Member
State"), no action has been undertaken or will be undertaken to
make an offer to the public of securities requiring publication of
a prospectus in any Relevant Member State. As a result, the
securities may only be offered in Relevant Member States (a) to any
legal entity which is a qualified investor as defined in the
Prospectus Directive; or (b) in any other circumstances falling
within Article 3(2) of the Prospectus Directive. For the purposes
of this paragraph, the expression an "offer of securities to the
public" means the communication in any form and by any means of
sufficient information on the terms of the offer and the securities
to be offered so as to enable an investor to decide to exercise,
purchase or subscribe the securities, as the same may be varied in
that Member State by any measure implementing the Prospectus
Directive in that Member State and the expression "Prospectus
Directive" means Directive 2003/71/EC (and amendments thereto,
including the 2010 PD Amending Directive, to the extent implemented
in the Relevant Member State), and includes any relevant
implementing measure in the Relevant Member State and the
expression "2010 PD Amending Directive" means Directive
2010/73/EU.
This
communication includes forward-looking statements within the
meaning of the securities laws of certain applicable jurisdictions.
These forward-looking statements include, but are not limited to,
all statements other than statements of historical facts contained
in this communication, including, without limitation, those
regarding Talvivaara's strategy, plans, objectives, goals and
targets. By their nature, forward looking statements involve known
and unknown risks, uncertainties and other factors because they
relate to events and depend on circumstances that may or may not
occur in the future. Talvivaara cautions you that forward-looking
statements are not guarantees of future performance and are based
on numerous assumptions and that its actual results of operations,
including its financial condition and liquidity, may differ
materially from (and be significantly more negative than) those
made in, or suggested by, the forward-looking statements contained
in this communication. In particular, this communication includes
forward-looking statements relating to Talvivaara's plans to
address the recent operational challenges faced by Talvivaara. Such
estimates are based on a number of assumptions that are, in turn,
based on currently available information and judgments based on
such information. However, these assumptions are inherently
uncertain and subject to a wide variety of significant operational
and regulatory risks and uncertainties that could cause the actual
outcome of Talvivaara's actions to materially differ from those
anticipated.
No statement
in this announcement is intended as a profit forecast or a profit
estimate and no statement in this announcement should be
interpreted to mean that earnings per share for the current or
future financial years would necessarily match or exceed the
historical published earnings per share. Prices and values of, and
income from, shares may go down as well as up and an investor may
not get back the amount invested. It should be noted that past
performance is no guide to future performance. Persons needing
advice should consult an independent financial
adviser.
J.P. Morgan
Securities plc, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting as sole
sponsor for Talvivaara and no one else in connection with the
proposed rights issue and will not regard any other person (whether
or not a recipient of this announcement) as a client in relation to
the proposed rights issue and will not be responsible to anyone
other than Talvivaara for providing the protections afforded to its
clients or for giving advice in connection with the proposed rights
issue, the contents of this announcement and the accompanying
documents or any other transaction, arrangement or matter referred
to herein or therein.
Each of
Nordea Bank Finland Plc, Merrill Lynch International, BNP PARIBAS
and Danske Bank A/S Helsinki Branch is acting exclusively for
Talvivaara and for no one else in connection with the proposed
rights issue and will not regard any other person (whether or not a
recipient of this announcement) as a client in relation to the
proposed rights issue and will not be responsible to anyone other
than Talvivaara for providing the protections afforded to their
respective clients or for providing advice in connection with the
proposed rights issue or any other transaction, arrangement or
matter referred to herein.
This
announcement should not be considered a recommendation by any of
J.P. Morgan Securities plc, Nordea Bank Finland Plc, Merrill Lynch
International, BNP PARIBAS or Danske Bank A/S Helsinki Branch or
any of their respective directors, officers, employees, advisers or
any of their respective affiliates in relation to any purchase of
or subscription for securities.
No
representation or warranty, express or implied, is given by or on
behalf of any of J.P. Morgan Securities plc, Nordea Bank Finland
Plc, Merrill Lynch International, BNP PARIBAS or Danske Bank A/S
Helsinki Branch or any of their respective directors, officers,
employees, advisers or any of their respective affiliates or any
other person as to the accuracy, fairness, sufficiency or
completeness of the information or the opinions or the beliefs
contained in this announcement (or any part hereof).
None of the
information contained in this announcement has been independently
verified or approved by any of J.P. Morgan Securities plc, Nordea
Bank Finland Plc, Merrill Lynch International, BNP PARIBAS or
Danske Bank A/S Helsinki Branch or any of their respective
directors, officers, employees, advisers or any of their respective
affiliates. Save in the case of fraud, no liability is accepted by
any of J.P. Morgan Securities plc, Nordea Bank Finland Plc, Merrill
Lynch International, BNP PARIBAS or Danske Bank A/S Helsinki Branch
or any of their respective directors, officers, employees, advisers
or any of their respective affiliates for any errors, omissions or
inaccuracies in such information or opinions or for any loss, cost
or damage suffered or incurred howsoever arising, directly or
indirectly, from any use of this announcement or its contents or
otherwise in connection with this announcement.
No person
has been authorised to give any information or to make any
representations other than those contained in this announcement
and, if given or made, such information or representations must not
be relied on as having been authorised by Talvivaara, any of J.P.
Morgan Securities plc, Nordea Bank Finland Plc, Merrill Lynch
International, BNP PARIBAS or Danske Bank A/S Helsinki Branch or
any other person. Subject to applicable rules and regulations, the
issue of this announcement shall not, in any circumstances, create
any implication that there has been no change in the affairs of
Talvivaara and its group since the date of this announcement or
that the information in it is correct as at any subsequent
date.
This
communication is directed only at (i) persons who are outside the
United Kingdom or (ii) persons who have professional experience in
matters relating to investments falling within Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order
2005 (the "Order") and (iii) high net worth entities, and other
persons to whom it may lawfully be communicated, falling within
Article 49(2) of the Order (all such persons together being
referred to as "relevant persons"). Any investment activity to
which this communication relates will only be available to and will
only be engaged with, relevant persons. Any person who is not a
relevant person should not act or rely on this announcement or any
of its contents.
Neither the
content of Talvivaara's website (or any other website) nor the
content of any website accessible from hyperlinks on Talvivaara's
website (or any other website) is incorporated into, or forms part
of, this announcement.
Talvivaara Proposed EUR 260 million
Rights Issue
This
announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: Talvivaaran Kaivososakeyhtiö Oyj via Thomson Reuters
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