Stock Exchange
Release
Talvivaara Mining Company
Plc
14 February 2013
Talvivaara
Mining Company annual results review for the year ended 31 December
2012
Production
and operations impacted by water balance situation
Financing
arrangements to secure liquidity for continued ramp-up to full
capacity
Highlights of Q4
2012
-
Nickel production of 2,317t and zinc production
of 4,106t
-
Production impacted by gypsum pond leakage in
November and continuing challenging water balance situation
throughout the fourth quarter
-
Metals plant operations stabilized following
leakage
-
Pekka Perä returned as CEO in November
2012
-
Further increase in total Mineral Resources
announced in November 2012; updated resources contain an estimated
3.0Mt of nickel in Measured and Indicated categories confirming
Talvivaara's long mine life
Highlights of
2012
-
Nickel production of 12,916t and zinc production
of 25,867t
-
Heavy rainfall and rapid spring melt aggravated
water balance situation and impacted production throughout the
year
-
Ore production temporarily suspended since
September 2012; anticipated cost savings have been realized
-
Continued improvement in equipment utilization
rates and availabilities across processes
-
A number of measures have been taken to manage
the water balance in the future, including a new water recycling
system and investments in reverse osmosis technology; over the
medium term, the Company continues to target a nearly closed water
circulation system
Highlights after the
reporting period
-
Kainuu ELY Centre has on 12 February 2013
decided to allow Talvivaara to pursue the treatment and release of
excess waters from the mine area; mining operations expected to
re-commence in July 2013
-
Temporary lay-offs of 184 employees between 18
February and 30 June 2013 to support Talvivaara's cost saving
initiatives
-
Promising development in production
processes:
-
All-time record average flow-rate of 1,422
m3/h through the
metals plant in January
-
98% process availability of the metals plant in
January
-
Strong evidence of leaching performance quickly
improving in heap sections from which excess water has been
removed
-
Actual year-to-date nickel production of 1,448t
until 12 February
Financing
arrangements
Talvivaara has sought a number of
financing arrangements to de-risk the Company's balance sheet,
secure liquidity for the continued ramp-up of operations towards
full capacity and provide an appropriate capital structure to
enable repayment or refinancing of short- and medium-term
indebtedness.
The financing transactions consist
of:
-
Underwritten rights issue to raise approximately
EUR 260 million in gross proceeds
-
Renegotiated EUR 100 million revolving credit
facility
-
Increase of advance payment from Cameco by USD
10 million to USD 70 million
-
EUR 12 million up-front payment from
Nyrstar
The financing transactions are
described in more detail in the corresponding Stock Exchange
Release published simultaneously with this announcement and a
Shareholder Circular expected to be published in the afternoon of
14 February 2013 on Talvivaara's website, www.talvivaara.com.
Guidance for
2013
Talvivaara anticipates producing
approximately 18,000t of nickel and 39,000t of zinc in 2013. Metals
production will continue to be impacted by the water balance issues
in the first half of the year, but is expected to return to a clear
ramp-up during the remainder of the year driven by the re-start of
ore production in July. The operational expenditure including
leasing for 2013 is estimated at approximately EUR 230 million,
including EUR 10-15 million budgeted for the treatment and release
of excess waters from the mine area. Capital expenditure is
anticipated to amount to EUR 60 million, including approximately
EUR 20 million to be spent in water management with the target of
reaching a sustainable water balance situation at the mine
site.
Key figures
EUR million |
Q4
2012 |
Q4
2011 |
FY
2012 |
FY
2011 |
Net
sales |
25.7 |
66.5 |
142.9 |
231.2 |
Operating
profit (loss) |
(57.0) |
14.9 |
(83.6) |
30.9 |
% of net sales |
(221.9%) |
22.5% |
(58.5)% |
13.4% |
Profit
(loss) for the period |
(59.4) |
3.7 |
(103.9) |
(5.2) |
Earnings
per share, EUR |
(0.22) |
0.01 |
(0.38) |
(0.04) |
Equity-to-assets ratio |
24.3% |
27.9% |
24.3% |
27.9% |
Net
interest bearing debt |
563.8 |
455.7 |
563.8 |
455.7 |
Debt-to-equity ratio |
183.8% |
141.3% |
183.3% |
141.3% |
Capital
expenditure |
29.6 |
21.6 |
97.5 |
79.1 |
Cash and
cash equivalents at the end of the period |
36.1 |
40.0 |
36.1 |
40.0 |
Number of
employees at the end of the period |
588 |
461 |
588 |
461 |
All reported figures in this release are
audited.
CEO Pekka
Perä comments: "We have today announced
a holistic financing arrangement to de-risk Talvivaara's balance
sheet and significantly improve our liquidity position. The
challenges encountered over the past year have resulted in
production shortfalls, and combined with a weak nickel price
environment, resulted in the need to raise additional capital.
Through the measures announced today, we are both securing
Talvivaara's liquidity position as we resolve our remaining
operational challenges, but also put in place a more appropriate
capital structure for the longer term as we resume the ramp-up of
production.
Our fundamental
strengths and opportunities remain unchanged. Talvivaara's current
resources contain an estimated 4.5 million tonnes of nickel,
sufficient to support decades of operations. We have proven that
the bioheapleaching process works as expected, provided that it is
managed optimally, and a number of process and organizational
changes have been implemented to ensure delivery of consistent and
improved leaching results. Our clear vision remains for Talvivaara
to become a Finnish mining champion of considerable international
significance. Talvivaara also plays an important role for the
Kainuu region in Finland, and we employed close to 600 people at
the end of 2012 with significant additional benefits through
contractors and follow-on effects. The announced capital raise is
critical to secure resources to achieve our vision for Talvivaara,
and continue to create growth in Finland and the local region in
particular.
Notwithstanding
our longer-term targets, near-term challenges remain that we are
addressing. The water balance situation caused by a year of
historically heavy rainfall and rapid snow melt had a material
impact on our production in 2012, and ultimately culminated in the
gypsum pond leakage in November. We expect to continue to see the
water balance issues impacting our production in the coming months,
and our nickel production target of 18,000 tonnes for 2013 reflects
a more material production ramp-up only during the second half of
the year. We are taking a number of measures to implement a
sustainable longer-term water balance with the target of operating
a closed circuit, but this will take some time. On 12 February we
received a key decision from the monitoring authority allowing the
discharge of purified excess water from the mine site, which is a
central next step to moderate the water balance and lower
operational risk levels. While the discharged waters are
neutralized of metals and harmful substances, regrettably some
sulphate remains expected to cause a temporary increase in the
sulphate content of the nearest lakes.
Our
disappointing financial result for the year, and in particular for
the fourth quarter, mirrors the lower-than-expected production and
EUR 23 million of costs and provisions for the gypsum pond leakage
and water balance management measures. Further, the nickel price
environment was relatively weak throughout the year, with nickel
recording the weakest performance across base metals. Whilst the
backdrop of a rapidly unfolding European economic crisis and the
prospect of weakening demand from China depressed market sentiment
in 2012, we remain confident of the long-term trajectory for nickel
driven by rapid production cost escalation across the
industry.
Finally, during
the fourth quarter I returned as CEO to work alongside the
management team and all of our employees as we overcome
Talvivaara's near-term challenges. I would like to take this
opportunity to thank everyone at Talvivaara for their considerable
dedication and our shareholders for their on-going
support."
Enquiries:
Talvivaara Mining Company
Plc Tel. +358 20 712 9800
Pekka Perä, CEO
Saila Miettinen-Lähde, Deputy CEO and CFO
College Hill Tel.
+44 20 7457 2020
David Simonson
Anca Spiridon
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 at G.W. Sundmans (auditorium), Helsinki,
Finland.
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.
Talvivaara's fourth quarter
review
Metals production stabilized
after the gypsum pond leakage
Talvivaara produced 2,317t of
nickel (Q4 2011: 4,769t) and 4,106t of zinc (Q4 2011: 10,524t) in
the fourth quarter of 2012. Metals production was impacted by the
gypsum pond leakage in November and the continuing challenging
water balance situation throughout the quarter.
On 4 November, Talvivaara
announced that it had detected a leakage in the gypsum pond at the
mine. The leakage was located on 7 November, the majority of it was
stemmed during the following days and it was completely stopped on
14 November. While most of the water that leaked from the pond was
contained within the mining concession area by existing dams and
the newly built fourth safety dam, some of the leakage water was
discharged into the environment while the fourth safety dam was
being constructed. Most of the discharged water was however
successfully neutralised with lime to precipitate metals from it
and to increase its pH close to neutral. The metal precipitates
were caught in a swamp area located close to the southern edge of
the mining concession area. Following the leakage, Talvivaara
purchased the affected area in December and commenced measures to
remove and treat the contaminated soil.
Talvivaara's metals recovery plant
was temporarily suspended between 4 and 21 November as a
precautionary measure due to the leakage. Since the successful
re-start on 21 November, plant performance continued satisfactory
during the remainder of the year. However, some short term
disturbances in the automation systems impacted production in
December and these are being investigated to avoid future
re-occurrence. Solution flow rates at the plant varied from around
800 m3/h to 1,400
m3/h in December
outside of the short-term disturbances.
Bioheapleaching continued to
suffer from the excess water in circulation which has affected the
process since the spring of 2012 due to the excessive rainfall
experienced. The water balance issues were further intensified in
November by the gypsum pond leakage, which forced the Company to
pump additional excess water into the heap circulation in order to
minimize the environmental effects of the leak. As a result, nickel
grades in solution pumped to metals recovery continued to decline
during the fourth quarter and reached a level of around 1.3 g/l at
year-end. However, the Company estimates it will take some months
before substantial improvement in the grades can be expected.
As previously announced,
Talvivaara's ore production has been suspended since September 2012
due to the prevailing water balance situation. The Company
anticipates re-commencing mining of new ore in July 2013 once the
main part of the Kuusilampi open pit has been de-watered. While ore
production was suspended, some waste mining continued in the fourth
quarter and the mining department produced 1.2Mt of waste rock
which was used in the construction of secondary heap foundations
(Q4 2011: 2.0Mt). During the quarter, the mining fleet was also
used in assisting in primary heap reclaiming and safeguarding
measures related to the gypsum pond leakage.
Production key figures
|
|
Q4
2012 |
Q4
2011 |
FY
2012 |
FY
2011 |
Mining |
|
|
|
|
|
Ore production |
Mt |
- |
3.2 |
8.7 |
11.1 |
Waste production |
Mt |
1.2 |
2.0 |
5.3 |
17.0 |
Materials handling |
|
|
|
|
|
Stacked ore |
Mt |
- |
3.2 |
8.7 |
11.1 |
Bioheapleaching |
|
|
|
|
|
Ore under leaching |
Mt |
44.3 |
35.6 |
44.3 |
35.6 |
Metals recovery |
|
|
|
|
|
Nickel metal content |
Tonnes |
2,317 |
4,769 |
12,916 |
16,087 |
Zinc metal content |
Tonnes |
4,106 |
10,524 |
25,867 |
31,815 |
Financial performance in the
fourth quarter of 2012
Net sales and
financial result
Talvivaara's net sales for nickel
and cobalt deliveries to Norilsk Nickel and for zinc deliveries to
Nyrstar during the quarter ended 31 December 2012 amounted to EUR
25.7 million (Q4 2011: EUR 66.5 million). In addition, Talvivaara
commenced production of saleable quantities of copper sulphide in
October and sold its first copper products under spot arrangements.
Net sales decreased by 42.6% compared to Q3 2012 primarily due to
lower production as a result of the gypsum pond leakage and
depressed metal grades in leach solution. Product deliveries in Q4
2012 amounted to 2,183t of nickel, 70t of cobalt and 8,178t of
zinc.
Changes in inventories of finished
goods and work in progress amounted to EUR (6.4) million (Q4 2011:
EUR 17.5 million). Due to discontinued mining and crushing
operations no new ore was stacked during Q4 2012 and work in
progress increased less in Q4 2012 than during normal operations.
In addition, the inventories of finished goods were reduced due to
year-end reconciliation of the inventory.
The operating loss for Q4 2012 was
EUR (57.0) million (Q4 2011: profit of EUR 14.9 million),
corresponding to an operating margin of (221.9%) (Q4 2011: 22.5%).
During the period, materials and services amounted to EUR
(20.0) million (Q4 2011: EUR (37.7) million) and other operating
expenses to EUR (33.4) million (Q4 2011: EUR (13.1) million).
Materials and services and other operating expenses increased by
23.7% compared to the third quarter of 2012. The increase was
primarily due to the costs incurred as a result of the gypsum pond
leakage and water balance management. During Q4 2012, the costs
incurred as a result of the gypsum pond leakage amounted to EUR 1.7
million. Talvivaara has also recognised EUR 12.2 million in
provisions for costs related to the leakage, in particular those
anticipated to be incurred in the clean-up of the land contaminated
with metal precipitates, and the treatment and subsequent discharge
of waters stored in the safety dams. A further EUR 9.1 million
provision has been recognised for the necessary water storage and
pumping arrangements and waste water neutralization measures to
secure a sustainable water balance at the mine site.
Loss for the period amounted to
EUR (59.4) million (Q4 2011: profit of EUR 3.7 million).
Balance sheet
and financing
Capital expenditure during the
last quarter of 2012 totaled EUR 29.6 million (Q4 2011: EUR 21.6
million). The expenditure related primarily to the uranium
extraction circuit, secondary leaching and pond and dam structures
built to contain the gypsum pond leakage and minimise any
environmental effects. Talvivaara received advance payments of EUR
9.7 million from Cameco to cover the construction costs of the
uranium extraction circuit during the period.
Base metals prices recovered
slightly towards the end of 2012
Base metals prices reached their
lowest levels during 2012 in the autumn, and recovered slightly
towards the end of the year as macroeconomic concerns started to
abate. Nickel closed the year at approximately USD 17,000/t, and
recorded an average of approximately USD 17,400/t for December.
London Metal Exchange ("LME")
nickel stocks increased throughout 2012. The reported December
stock level of approximately 138,000 tonnes was the highest since
early 2011.
Talvivaara's annual results
review 2012
Nickel market impacted by
macroeconomic concerns
In 2012, the nickel market along
with other base metals was impacted by concerns over global
macroeconomic growth. Having started the year at around USD
20,000/t, the nickel price declined to its lowest monthly average
since mid-2009 of approximately USD 15,700/t in August, as the
Eurozone crisis intensified and markets reacted to concerns over
lower commodities demand growth in China in particular. While the
nickel price recovered to USD 17,000-18,000/t by the end of the
year, nickel had the weakest price performance among the base
metals complex in 2012.
Global primary nickel consumption
grew by 4% to 1.66 million tonnes during the year, and Chinese
consumption totaled 0.77 million tonnes representing approximately
45% of the global market. Chinese demand growth slowed down to
approximately 10% in 2012, as compared to 20% in 2011. (Source: CRU)
On the supply side, global primary
nickel supply amounted to 1.71 million tonnes in 2012, leaving the
market at a surplus of some 46,000 tonnes. China continued to be a
significant importer of nickel, with Chinese consumption exceeding
supply by an estimated 0.31 million tonnes. Delays in the
commissioning of several large greenfield nickel projects has
continued to be a pertinent feature of the market. (Source: CRU)
The EUR/USD exchange rate was
largely driven by unfolding of the Eurozone crisis during the year.
The Euro traded at 1.30-1.35 U.S. dollars until the spring, and
declined to its 2012 low of approximately 1.20 U.S. dollars in
August before returning to the 1.30-1.35 range by the end of the
year.
Production and operations
significantly impacted by water balance situation
Talvivaara closed the year having
produced 12,916t of nickel (2011: 16,087t) and 25,867t of zinc
(2011: 31,815t). Over the course of 2012, Talvivaara faced
increasing challenges with the water balance at the mine site, as
rapid snow melt 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 the
gypsum pond leakage in November 2012.
Talvivaara took steps throughout
the year to manage the excess water on site, starting with the
installation in early 2012 of a new water recycling system reducing
the need for raw water intake. In April, the Company announced that
it will invest in reverse osmosis technology for purification of
sulphate containing waters. The first two reverse osmosis units
were subsequently commissioned in November, enabling further
increase in process water recycling and substantial reduction in
raw water intake. A third reverse osmosis line will be installed
during the spring of 2013. Despite these measures, the water
balance situation at the mine became increasingly more challenging
as the year progressed, in particular due to rapid snow melt in the
spring and historically heavy rainfall through the summer and early
autumn. The excess water on site and in solution circulation
diluted metals grades in leach solution, thereby impacting metals
production. Talvivaara also decided to alter its near-term
production scheme as of September 2012 by temporarily suspending
the production of new ore, as excess water had to be stored in the
open pit and Talvivaara already had a substantial nickel inventory
under leaching.
In November, the water balance
challenges culminated in the gypsum pond leakage, where a portion
of the excess water on site had been stored. The leakage, which was
discovered on 4 November, was located on 7 November, the majority
of it was stemmed during the following days and it was completely
stopped on 14 November. While most of the water that leaked from
the pond was contained within the mining concession area by
existing dams and the newly built fourth safety dam, some of the
leakage water was discharged into the environment while the fourth
safety dam was being constructed. Most of the discharged water was
however successfully neutralised with lime to precipitate metals
from it and to increase its pH close to neutral. The metal
precipitates were caught in a swamp area located close to the
southern edge of the mining concession area. Following the leakage,
Talvivaara purchased the affected area in December and commenced
measures to remove and treat the contaminated soil.
Talvivaara's metals recovery plant
was temporarily suspended between 4 and 21 November as a
precautionary measure due to the leakage. Since the successful
re-start on 21 November, plant performance continued satisfactory
during the remainder of the year and became increasingly stable
going into 2013.
In mid-March 2012, Talvivaara
experienced a fatal incident at its metals recovery plant area,
caused by a localised, temporary discharge of excess hydrogen
sulphide gas from the metals recovery process. Following the
incident, Talvivaara immediately lowered solution flow into the
metals recovery plant and subsequently also started a maintenance
stoppage, which was prolonged by an unscheduled stoppage with focus
on preventive occupational safety-related modifications and
improvements. The metals recovery plant was re-started by mid-April
2012; however, production was restricted for most of April due to
the stoppage and subsequent changes to certain operating
procedures, the implementation of which slowed down early ramp-up
after the re-start.
Due to the extended stoppage
following the fatality and the water management issues during the
spring and summer, Talvivaara reduced its nickel production
guidance for 2012 from 25,000-30,000t to approximately 17,000t in
August. After the gypsum pond leakage and related production
suspension in November, the Company was again forced to re-assess
its full-year production target, and reduced it to approximately
13,000t of nickel.
At the departmental level, mining
and materials handling produced and processed 8.7Mt of ore (2011:
11.1Mt) and 5.3Mt of waste (2011: 17.0Mt) in 2012. The challenging
water balance situation started to impact ore production in the
summer, as excess water had to be stored in the open pit and the
production of new ore was temporarily suspended as of September
2012. Despite this, a record level of 1.5 million tonnes of ore was
mined and subsequently crushed in July 2012 and equipment
availabilities in materials handling approached the levels required
for full-scale production. During the suspension of ore production,
the mining fleet has been partly mobilized to assist in primary
heap reclaiming, while some waste mining has also continued.
In bioheapleaching, the excess
water in circulation and reduced evaporation diluted the metal
grades in leach solution, and the high water content in the heaps
also negatively affected leaching performance by reducing the
efficiency of aeration. As a result, the average nickel grade in
the solution pumped to the metals recovery plant decreased
throughout 2012, recording slightly below 2 g/l in early 2012, 1.8
g/l in the second quarter, between 1.5 and 1.6 g/l in the third
quarter and 1.3 g/l in the fourth quarter. Measures to improve the
leaching performance are being taken based on the findings from
extensive operational bioheapleaching studies carried out during
the autumn of 2012. Multiple changes are being implemented to
ensure constant and balanced distribution of air within the primary
heaps, and additional aeration into the secondary heaps is being
introduced. Attention is also being paid to agglomeration and the
quality and proper distribution of irrigation solutions.
Furthermore, reclaiming and re-stacking of the existing primary
heaps continues in order to enable efficient recovery of the
existing nickel inventory under leaching.
In metals recovery, progress
continued to be made throughout 2012 in increasing utilization
rates and maintaining stability. The average flow rate at the plant
reached around 1,500 m3/h for several
periods and Talvivaara expects ramp-up to 1,600 m3/h in
the near future. The stability of hydrogen sulphide production also
improved following thorough maintenance of both hydrogen sulphide
plants during the year and focus on the quality of the sulphur
feed. Further, the overall improved process control helped in
minimising the odour discharges such that noticeable odour
discharges are now only associated with process disturbances, or
start-up or shut-down phases relating to production stoppages.
Construction of the uranium
recovery plant progressed according to plan during the year, with
completion rate at close to 100% at year-end. Talvivaara also
commenced production of saleable quantities of copper sulphide in
October 2012. For the time being, the product is being sold under
spot arrangements.
Financial
review
Net sales and
financial result
Talvivaara's net sales for nickel
and cobalt deliveries to Norilsk Nickel and for zinc deliveries to
Nyrstar during 2012 amounted to EUR 142.9 million (2011: EUR 231.2
million). Net sales decreased by 38.2% compared to 2011 mainly due
to lower deliveries and the lower nickel price. Production was
impacted by the challenging water situation at the mine throughout
the year, the fatality at the metals recovery plant area in March
and the gypsum pond leakage in November. Product deliveries
amounted to 12,641t of nickel, 29,256t of zinc and 355t of cobalt
(2011: 15,795t of nickel, 35,935t of zinc, 400t of cobalt).
The Group's other operating income
amounted to EUR 4.1 million (2011: EUR 2.3 million) and mainly
consisted of indemnities on losses and fair value gains on
biological assets.
Materials and services were EUR
(117.8) million in 2012 (2011: EUR (135.0) million) and other
operating expenses were EUR (81.2) million (2011: EUR (55.2)
million). The largest cost items were production chemicals,
external services, electricity and maintenance. The costs of the
gypsum pond leakage and water balance management measures amounted
to EUR 23.0 million, including provisions.
Employee benefit expenses were EUR
(28.1) million (2011: EUR (25.5) million). The increase was
attributable to the increased number of personnel.
The operating loss for 2012 was
EUR (83.6) million (2011: profit of EUR 30.9 million). The
operating margin for 2012 was (58.5%) and was in particular
affected by the water balance challenges and gypsum pond leakage in
November (2011: 13.4%).
Finance income for 2012 was EUR
0.8 million (2011: EUR 1.2 million) and consisted mainly of
exchange rate gains. Finance costs of EUR (46.5) million (2011: EUR
(39.1) million) mainly resulted from interest and related financing
expenses on borrowings.
The loss for the 2012 amounted to
EUR (103.9) million (2011: EUR (5.2) million) reflecting the
challenging nickel price, elevated costs due to the water balance
challenges and gypsum pond leakage and lower than anticipated level
of product deliveries. Earnings per share was EUR (0.38) (2011: EUR
(0.04).
The total comprehensive income for
2012 was EUR (103.9) million (2011: EUR (14.6) million). In 2011,
it included a reduction in hedge reserves resulting from the
occurrence of the hedged sales.
Balance
sheet
Capital expenditure in 2012
totaled EUR 97.5 million (2011: EUR 79.1 million). The expenditure
related primarily to the uranium extraction circuit, earthworks in
secondary leaching and secondary heap foundations and the dam and
pond structures constructed due to the gypsum pond leakage. In
addition, major investments were made in environmental technology
toimprove the quality of effluent waters and limit dust emissions.
On the consolidated statement of financial position as at 31
December 2012, property, plant and equipment totaled EUR 809.5
million (31 December 2011: EUR 762.0 million).
In the Group's assets, inventories
amounted to EUR 297.8 million on 31 December 2012 (31 December
2011: EUR 240.4 million). The increase in inventories reflects the
ramp-up of production and the consequent increase in the amount of
ore stacked on heaps, valued at cost. The temporary alteration to
the near-term production scheme also affected the amount of
inventories in the second half of 2012. The inventories of finished
goods were reduced due to year-end reconciliation of the
inventory.
Trade receivables amounted to EUR
32.2 million on 31 December 2012 (31 December 2011: EUR 64.0
million). The trade receivables decreased due to the suspension of
metals production in connection with the gypsum pond leakage, which
led to reduced product deliveries to customers during the last
quarter of 2012.
On 31 December 2012, cash and cash
equivalents totaled EUR 36.1 million (31 December 2011: EUR 40.0
million).
In equity and liabilities, total
equity amounted to EUR 306.8 million on 31 December 2012 (31
December 2011: EUR 322.6 million). Talvivaara raised EUR 81.5
million, net of transaction costs, from an issue of 24,589,050 new
shares in Q1 2012. In addition, interest cost of EUR 2.8 million of
a perpetual capital loan was capitalized in equity. A total of
1,830,087 new shares were subscribed and paid for in 2012 under the
company's stock option rights 2007A and the entire subscription
price amounting to EUR 4.9 million was recognized in equity.
Borrowings increased from EUR
495.7 million on 31 December 2011 to EUR 599.8 million at the end
of December 2012. The changes in borrowings during 2012 mainly
resulted from the issue of a senior unsecured bond of EUR 110
million, a draw-down of EUR 20 million from the revolving credit
facility, a repayment of commercial paper notes amounting to EUR
8.5 million and a buy-back of senior unsecured convertible bonds
due 2013 with a nominal value of EUR 8 million.
Total advance payments as at 31
December 2012 amounted to EUR 273.7 million, representing an
increase of EUR 26.5 million from EUR 247.3 million on 31 December
2011. During 2012, Talvivaara received a total of EUR 32.1 million
in advance payments from Cameco based on the uranium off-take
agreement between the companies, whilst the advance payment from
Nyrstar was amortised by EUR 5.6 million as a result of zinc
deliveries.
Total equity and liabilities as at
31 December 2012 amounted to EUR 1,260.8 million (31 December 2011:
EUR 1,156.7 million).
Financing
In June, Talvivaara's EUR 130
million revolving credit facility was amended. In December,
Talvivaara requested and was granted a covenant holiday from the
banks. In addition, the total commitments of the revolving credit
facility were reduced to EUR 100 million. As at 31 December 2012,
EUR 70 million of the facility was drawn.
In April and May, Talvivaara
conducted a buy-back for a portion amounting to a nominal value of
EUR 8 million of the Company's senior unsecured convertible bonds
due 2013. The remaining convertible bonds have a nominal value of
EUR 76.9 million and are due in May 2013.
In March, Talvivaara issued a EUR
110 million senior unsecured bond. The 5-year bond has an issue
price of 100%, pays a coupon of 9.75% and is callable after 3
years. The bond issue was sold to both Finnish and international
institutional and private investors. The bond was settled and the
notes were listed on NASDAQ OMX Helsinki in April.
In February, Talvivaara completed
an issue of 24,589,050 new shares representing approximately 10 per
cent of the number of the existing shares of the Company. The
proceeds of the share issue amounted to EUR 82.6 million before
commissions and expenses and to EUR 81.5 million net of costs. An
Extraordinary General Meeting of Talvivaara Mining Company Plc
resolved to approve the share issue in March, and the new shares
were subsequently registered in the Finnish Trade Register.
Going concern
The Group's financial statements
for the financial year 2012 have been prepared on a going concern
basis taking account of the Group's on-going financing
transactions, production forecasts and financial projections, and
reasonably possible changes in production, metal prices and foreign
exchange rates.
The Group has experienced a number
of operational challenges in 2012, the prevailing water balance
issues are continuing to impact production, and the recent nickel
price environment has been weak. The Group is taking a number of
measures to overcome its near-term operational challenges, but the
full effect of these actions will only materialise over several
months. Therefore, the Board believes that the Group must secure
additional funds in order to be able to finance its operations and
to repay its debts over the coming 12 months.
In order to address its liquidity
situation, the Group has taken measures to reduce its costs and
improve its overall efficiency, including temporarily suspending
ore production since September 2012 and undertaking temporary
layoffs due to the suspension of ore production. Further, the
Company has renegotiated its EUR 100 million revolving credit
facility and entered into an amended facility agreement on 14
February 2013, which, among other things, amended the financial and
production covenants in the previous facility agreement to be more
appropriate for the Group's current operations and, therefore,
reduces the Company's risk in relation to compliance with its
covenants. The amended facility remains subject to certain
conditions subsequent, including the completion of the proposed
rights issue discussed below and the Company receiving net proceeds
therefrom of at least EUR 240 million by 30 April 2013.
To improve its liquidity and
capital structure, the Company is also undertaking a rights issue.
In connection with the proposed rights issue, the Company has on 14
February entered into a standby underwriting letter with banks,
pursuant to which the banks have undertaken to underwrite, subject
to certain conditions, such portion of the proposed rights issue
that is not subject to shareholder commitments. The Company's three
key shareholders have given their irrevocable commitments to
subscribe in total 31.06 per cent of the proposed rights issue,
which the Board is confident will be able to raise approximately
EUR 260 million in gross proceeds. Proceeding with and completion
of the rights issue remains subject to shareholder approval at an
Extraordinary General Meeting to be held on 8 March 2013.
In order to ensure that the Group
has sufficient liquidity until the Company receives the proceeds
from the proposed rights issue, Talvivaara Sotkamo has on 12
February 2013 entered into an amendment agreement with Cameco
concerning the uranium take-in-kind agreement pursuant to which the
amount of the up-front investment that Cameco is to pay to
Talvivaara Sotkamo for the construction of the uranium extraction
facility was increased by USD 10 million to USD 70 million, and the
duration of the agreement extended to 31 December 2017 and
commercial terms revised accordingly. In addition, Talvivaara
Sotkamo has on 14 February 2013 entered into an amendment agreement
with Nyrstar regarding the zinc in concentrate streaming agreement
pursuant to which Nyrstar is to make an up-front payment of EUR 12
million to Talvivaara Sotkamo in return for Talvivaara Sotkamo
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.
The Board believes that taking
into account receipt of the proceeds of the proposed rights issue
and subject to the conditions subsequent under the amended facility
agreement having been satisfied, the Group has sufficient working
capital for its present purposes, that is for at least 12 months
from the date of these financial statements.
Business development and
commercial arrangements
Planned uranium extraction and
uranium off-take agreement with Cameco
Talvivaara is preparing for the
recovery of uranium as a by-product of the Company's existing
operations. Uranium occurs naturally in small concentrations in the
Talvivaara area and leaches into the process solution along with
Talvivaara's main products. Annual uranium production is estimated
at 350tU (ca. 770,000 pounds), corresponding to approximately 410t
(900,000 pounds) of yellow cake (UO4).
Talvivaara's entire uranium production will be sold under a
long-term agreement to Cameco.
Following receipt of the
construction permit in August 2011, Talvivaara commenced
construction of the uranium recovery facility, which was close to
completion at the end of 2012. The permitting process for uranium
production is on-going and the start of uranium production is
further subject to, among others, environmental permit approval and
chemical authorisation. The decision on the environmental permit is
expected in the first half of 2013 in connection with the general
update of the mine's environmental permit.
Production expansion - Operation
Overlord
Conceptual studies relating to
production expansion beyond 50,000tpa of nickel continued during
the year, with a particular emphasis on permitting and the on-going
Environmental Impact Assessment. The scoping studies are based on
the target of doubling the presently planned production to
approximately 100,000tpa of nickel. Whilst studies relating to
various processing options continue, it appears relatively likely
that a substantial part of the expanded production would be
LME-quality nickel metal, i.e. Talvivaara would integrate its
production one step further downstream.
No investment decisions relating
to the production expansion have yet been taken and are unlikely to
be taken in the near term.
Energy strategy
Talvivaara's energy strategy is
focused on building an environmentally sound portfolio of low-cost
capacity allowing the Company to be energy self-sufficient in the
longer term. Talvivaara's electricity need is currently
approximately 45MW, and is expected to increase significantly if
the Company proceeds with the planned capacity expansion and
further refining of nickel into LME-quality metal.
Talvivaara increased its capacity
share in the Fennovoima nuclear project in Finland from
approximately 10MW to approximately 60MW in 2012. The Company is
also studying, amongst others, on-site windpower production,
bioenergy and utilization of energy generated in the production
process.
Geology
Talvivaara updated its total
Mineral Resources estimation in November 2012. The total Mineral
Resources, as defined by the JORC code, increased by 32% to 2,053Mt
from the total of 1,550Mt announced in October 2010. The increased
resources contain 4.5Mt of nickel and 10.3Mt of zinc, up from 3.4Mt
and 7.6Mt in 2010, respectively. Contained nickel and zinc in the
Measured and Indicated categories amount to 3.0Mt and 6.6Mt,
respectively. Talvivaara's current total Mineral Resources are
presented in the table below.
Category |
Year |
Mt |
Nickel
% |
Cobalt
% |
Copper
% |
Zinc
% |
Uranium
% |
Measured |
2012 |
504.0 |
0.23 |
0.02 |
0.13 |
0.50 |
0.0017 |
|
2010 |
432.2 |
0.23 |
0.02 |
0.13 |
0.50 |
0.0017 |
Indicated |
2012 |
800.5 |
0.23 |
0.02 |
0.13 |
0.51 |
0.0017 |
|
2010 |
689.2 |
0.23 |
0.02 |
0.13 |
0.50 |
0.0018 |
Subtotal |
2012 |
1,304.5 |
0.23 |
0.02 |
0.13 |
0.50 |
0.0017 |
|
2010 |
1,121.4 |
0.23 |
0.02 |
0.13 |
0.50 |
0.0018 |
Inferred |
2012 |
748.3 |
0.21 |
0.02 |
0.12 |
0.49 |
0.0018 |
|
2010 |
428.8 |
0.20 |
0.02 |
0.12 |
0.47 |
0.0017 |
Total |
2012 |
2,052.8 |
0.22 |
0.02 |
0.13 |
0.50 |
0.0017 |
|
2010 |
1,550.2 |
0.22 |
0.02 |
0.13 |
0.49 |
0.0017 |
The resource increase further
confirms the long mine life of the Talvivaara deposits. Further
excellent exploration potential remains around the currently known
ore body, and 2013 exploration targets focus on infill drilling at
the Southern and Northern parts of the Kolmisoppi deposit and the
area between the Kuusilampi and Kolmisoppi deposits.
Talvivaara has undertaken a
project to also update its ore reserves estimates and anticipates
announcing the new reserves during the second half of 2013.
Research and
development
Talvivaara's research and
development activities in 2012 focused on water management,
enhancing bioheapleaching performance and further optimization of
the metals plant operations.
During the year, Talvivaara
carried out an extensive study to further identify the factors
impacting leaching performance, and as a result identified a number
of additional measures to improve leaching results. As part of the
study, production heap sections were opened to determine leaching
properties within the heap. Whilst some areas in the opened
sections had been well oxidized and leaching results were optimal,
several other areas were found where aeration had been inefficient
and where the ore remained clearly unreacted. Multiple changes are
being implemented to ensure constant and balanced distribution of
air within heaps, including the elimination of aeration pipe
blockages, alterations in the physical design of future primary
heaps and aeration pipes, and an improved drainage system.
Development work is also on-going
to improve agglomeration quality, as the moisture content and
stability of agglomerates is a key factor affecting leaching times
and recovery rates. Copper heap leaching operations have reported
up to 30-50% improvements in leaching times depending on the
quality of agglomerates. Leaching results may also be impacted in
part by the accumulation of certain elements in the solution
circulation, the impact of which is being managed by controlling
their concentration in irrigation solution.
Talvivaara also continued to
conduct pilot heap tests throughout the year to determine the
impact of various process conditions on leaching performance and
test new measurement technologies. Localized tests were also
carried out with production leaching pads.
At the metals recovery plant,
research and development activities focused on pilot-testing of the
reverse osmosis -based water treatment plant, which was
commissioned for operational use in November 2012. Talvivaara also
continued to study and test catalytic burners for metals recovery
plant ventilation gases containing hydrogen sulphide and carbon
dioxide.
Talvivaara participates in various
co-operation and networking projects with universities, research
centres and other companies. The research and development function
was re-organized in July 2012 and the plant laboratory was included
in research and development.
Sustainable development,
safety and permitting
Sustainable
development and environment
Whilst Talvivaara continued to
make underlying progress in the area of sustainable development
during 2012, significant challenges were faced in the area of water
management. Due to a persistently challenging water balance
situation throughout the year, the Company had to store excess
water in solution circulation, process ponds, the open pit and the
gypsum ponds. The gypsum pond leakage that occurred in November
resulted in elevated nickel concentrations in the nearby waters,
but the effects were only seen in the vicinity of the mining
concession area. Talvivaara and the authorities continue to monitor
the situation and expect to be able to determine the eventual
impact of the leak during the summer of 2013.
Despite the water management
challenges faced during the year, Talvivaara continued to develop
its operations in line with its sustainable development policy
which focuses on continuous improvement and operational excellence.
In 2012, the Company paid special attention to improved control of
water discharges, dust emissions, odour emissions, active
stakeholder communication and continued implementation of
management systems supportive of sustainable development.
Talvivaara continued to make
significant progress in reducing its sulphate and sodium discharges
into nearby lakes as a result of process improvements and increased
water recycling. Furthermore, the new reverse osmosis -based water
treatment plant was commissioned in November, reducing the need for
raw water intake from the environment. In the medium term,
Talvivaara's goal is to implement a closed water circulation
system, which is expected to reduce the risk of weather conditions
impacting Talvivaara's operations or environmental safety. Key
elements of the targeted closed water circulation system include
additional purification of process waters and more efficient
separation of process waters and captured rain and natural run-off
water.
During the year, dust emissions
were further reduced through a new dust removal system at the
materials handling screening hall, implemented in the summer.
Talvivaara also continues to study new technologies for further
reducing odour emissions, including catalytic burning of hydrogen
sulphide gases.Odour complaints from nearby residents decreased
from 131 in 2011 to 77 in 2012, and only isolated complaints have
been received in recent months.
Talvivaara again took part in the
CDP carbon footprint reporting initiative. This data gathering and
reporting exercise will help the Company to optimize its greenhouse
gas emissions in the future. Talvivaara also continued to develop
its Global Reporting Initiative (GRI) reporting and related data
verification.
Talvivaara prepared for ISO 9001
standard compliant quality management system and OHSAS 18001
standard compliant occupational health and safety management system
during the year. Certification for both management systems is
currently expected to be sought later in 2013. Talvivaara was
awarded ISO 14001 certification for its environmental management
system in 2010. The Company has also commenced implementation of a
risk management system in accordance with the ISO 31000
standard.
The environmental security placed
for future restoration of the area and monitoring obligations
amounted to EUR 31.9 million at the year-end (2011: EUR 31.2
million).
During the year, Talvivaara
continued to focus on its community programme. Meetings with the
local residents continued, and a new, locally focused internet site
(www.paikanpaalla.fi) was launched in early 2012 to provide
up-to-date environmental information and a discussion and feedback
channel for the local residents. Talvivaara also commenced regular
sessions in nearby cities and towns to review recent events and the
Company's performance with a particular focus on local
communities.
Safety
With respect to safety issues
Talvivaara's goal is a safe and healthy working environment, and
the Company continued to develop its safety culture based on zero
accident philosophy.
In March 2012, one of Talvivaara's
employees regrettably lost his life in the vicinity of the metals
recovery plant. Increased hydrogen sulphide concentrations had been
detected in the area, and work had been suspended in accordance
with occupational safety guidelines. The fatality has been
distressing for everyone at Talvivaara, and crisis counselling was
made available for personnel. The Company held an unscheduled
stoppage in late March and early April with focus on preventative
occupational safety-related improvements.
In order to further improve
occupational safety and minimise the risk of incidents at the mine
site, a number of measures were implemented in 2012. Operationally,
safety instructions were further refined and developed, access
practices in the vicinity of the metals recovery were altered and
additional fixed gas detectors were installed. Occupational
safety-related modifications in the metals recovery process
include, among others, increased scrubbing of hydrogen sulphide
gases and improved control of hydrogen sulphide feed into the
process.
The injury frequency in 2012 was
16.6 lost time injuries/million working hours (2011: 16.1 lost time
injuries/million working hours).
Permitting
In January 2012, Talvivaara
received a positive opinion on its uranium recovery process from
the European Commission under the Euratom Treaty. In its opinion,
the European Commission considered that uranium recovery at the
Talvivaara mine complies with the goals set by the Euratom Treaty
and may improve the supply security of nuclear fuel in the European
Union. In March, Talvivaara also received a licence from the
Finnish Government to extract uranium as a by-product from its
existing operations pursuant to the Nuclear Energy Act. The permit
is valid throughout the life of the mine, however, no longer than
until the end of 2054.
In April 2012, Talvivaara was
informed by the Northern Finland Regional State Administrative
Agency that the Company's environmental permit for uranium
extraction and the general update of Talvivaara mine's
environmental permit are to be processed together. Decisions on the
permits are expected during the first half of 2013. Talvivaara
continues to operate under the Company's existing environmental
permit until the renewal process is completed. Talvivaara aims to
start uranium recovery as soon as all the necessary permits have
been obtained.
Following completion of the
Environmental Impact Assessment ("EIA") programme, the EIA process
for the potential expansion of the Talvivaara mine was initiated
during the first quarter of 2012. The EIA covers options to expand
production capacity up to 100,000t of nickel per annum, and also
the option to refine nickel sulphide into LME-quality nickel metal.
Talvivaara expects to submit the environmental permit application
for production expansion in 2013 following completion of the EIA
process.
Risk management and key
risks
In line with current corporate
governance guidelines on risk management, Talvivaara carries out an
on-going 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
counterparties, 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.
In the short term, Talvivaara's
key operational risks continue to relate to the on-going ramp-up of
operations. While the Company has demonstrated that all of its
production processes work and can be operated on industrial scale,
the rate of ramp-up is still subject to risk factors including the
reliability and sustainable capacity of production equipment, and
eventual speed of leaching and rates of metals recovery in
bioheapleaching. In addition, there may be production and ramp-up
related risks that are currently unknown or beyond the Company's
control.
The market price of nickel has
historically been volatile and in the Company's view this is likely
to persist, driven by shifts in the supply-demand balance,
macroeconomic indicators and variations in currency exchange
ratios. Nickel sales currently represent close to 90% of the
Company's revenues and variations in the nickel price therefore
have a direct and significant effect on Talvivaara's financial
result and economic viability. Talvivaara is, since February 2010,
unhedged against variations in metal prices. Full or substantially
full exposure to nickel prices is in line with Talvivaara's
strategy and supported by the Company's view that it can operate
the Talvivaara mine, once it has been fully ramped up, profitably
also during the lows of commodity price cycles.
Talvivaara's revenues are almost
entirely in US dollars, whilst the majority of the Company's costs
are incurred in Euro. Potential strengthening of the Euro against
the US dollar could thus have a material adverse effect on the
business and financial condition of the Company. Talvivaara hedges
its exposure to the US dollar on a case by case basis with the aim
of limiting the adverse effects of US dollar weakness as considered
justified from time to time.
Liquidity and refinancing risks
may arise as a result of the Company's inability to produce
sufficient volumes of its saleable products, particularly nickel,
unexpected increase in production costs, and sudden or substantial
changes in the prices of commodities or currency exchange rates.
Talvivaara seeks to reduce liquidity risk by close monitoring of
liquidity in order to detect any threat of adverse changes in
advance so as to allow for sufficient time to secure access to
adequate credit or other funding on reasonable terms. Talvivaara
also seeks to maintain a balanced maturity profile of its long-term
debt in order to mitigate refinancing risks.
Personnel
The growth in Talvivaara's
personnel continued in 2012, with the total number of employees
increasing from 461 to 588. The personnel is mostly recruited
locally from the Kainuu region, where Talvivaara is the largest
provider of new job opportunities. The Company also employed
approximately 90 summer trainees.
The average age of Talvivaara's
personnel was 38 years. In its recruitment process, Talvivaara
seeks to maintain a representative staff age structure.
The salaries and wages of
Talvivaara's personnel are based on industry-wide collective
agreements. The total compensation consists of base salary and
short and long term incentive schemes. Annual short term incentive
metrics include personal performance and company-wide criteria. The
Company's long term incentive schemes comprise Talvivaara's Stock
Options 2007, Stock Options 2011 and Group personnel fund to manage
the earnings bonuses paid by Talvivaara. In addition, the
management holding company Talvivaara Management Oy is owned by
executive management and certain other key employees.
During the year, Talvivaara held
its first organization-wide employee satisfaction review to
identify organizational strengths and key areas for improvement.
Human resources processes were also defined and developed and
leadership training was increased. Personnel development is based
on annual training and development plans, and all employees attend
performance appraisal discussions with their managers. All
Talvivaara personnel participate in induction training with work
safety as a key component. The Company's target is also that all of
its employees will have first aid competence.
Corporate governance
statement
Talvivaara issues its Corporate
Governance Statement of 2012 and publishes it on the Company's
website at www.talvivaara.com on the date of this announcement. The
Corporate Governance Statement does not form part of the Board of
Directors' Report.
Resolutions of the Annual
General Meeting
Talvivaara's Annual General Meeting was held on 26
April 2012 in Sotkamo, Finland. The resolutions of the AGM
included:
-
that no dividend be paid for the financial year
2011;
-
that the annual fee payable to the members of
the Board for the term until the close of the Annual General
Meeting in 2013 be as follows: Executive Chairman of the Board EUR
280,000, Deputy Chairman (Senior Independent Director) EUR 69,000,
Chairmen of the Board Committees EUR 69,000 and other Non-executive
Directors EUR 48,000;
-
that the number of Board members be eight and
that Mr. Edward Haslam, Ms. Eileen Carr, Mr. D. Graham Titcombe,
Mr. Tapani Järvinen and Mr. Pekka Perä be re-elected as Board
members and Mr. Stuart Murray, Mr. Michael Rawlinson and Ms. Kirsi
Sormunen be appointed as new members of the Board;
-
that the auditor be reimbursed according to the
auditor's approved invoice and authorised public accountants
PricewaterhouseCoopers Oy be elected as the Company's auditor for
the financial year 2012;
-
that the Board be authorised to decide on the
repurchase, in one or several transactions, of a maximum of
10,000,000 of the Company's own shares. The authorisation is valid
until 25 October 2013 and replaces the authorisation to repurchase
10,000,000 shares granted by the Annual General Meeting of 28 April
2011; and
-
that the Board be authorised to decide on the
conveyance, in one or several transactions, of a maximum of
10,000,000 of the Company's own shares.The shares may be conveyed
to the Company's shareholders in proportion to their present
holding or by waiving the pre-emptive subscription rights of the
shareholders and the authorisation is valid until 25 April
2014.
Shares and
shareholders
The number of shares issued and
outstanding and registered on the Euroclear Shareholder Register as
of 31 December 2012 was 272,309,640. Including the effect of the
EUR 85 million convertible bond of 14 May 2008, the EUR 225 million
convertible bond of 16 December 2010, the Option Schemes of 2007
and 2011 and share subscriptions registered during 2012, the
authorised full number of shares of the Company amounted to
321,285,376.
The share subscription period for
stock options 2007A was between 1 April 2010 and 31 March 2012. By
the end of the subscription period a total of 2,279,373 Talvivaara
Mining Company's new shares were subscribed for under the stock
option rights 2007A. A total of 53,727 stock option rights 2007A
remained unexercised following the end of the subscription period
and expired.
The share subscription period for
stock options 2007B is between 1 April 2011 and 31 March 2013. No
new shares of Talvivaara were subscribed for under the stock option
rights 2007B in 2012 and a total of 2,284,337 stock option rights
2007B remain unexercised. A total of 2,327,000 option rights 2007C
have been issued to 250 key employees and the subscription period
for stock options 2007C is between 1 April 2012 and 31 March 2014.
A total of 2,327,000 stock options 2007C remain unexercised.
In February 2012, Talvivaara
completed an issue of 24,589,050 new shares. An Extraordinary
General Meeting of Talvivaara Mining Company Plc. resolved on 12
March 2012 to approve the proposal by the Board of Directors on the
share issue in deviation from the shareholders' pre-emptive
subscription rights. The new shares were registered with the
Finnish Trade Register on 13 March 2012.
In addition, the Board of
Directors has resolved, on the basis of the authorisation granted
by the Extraordinary General Meeting held on 12 March 2012, to
issue special rights entitling to subscribe up to 184,428 new
shares, in order to carry out an adjustment to the conversion
price, as a result of the equity placing, in accordance with the
terms and conditions of the convertible bonds due 2013. Accordingly
the maximum number of ordinary shares that may be issued upon
conversion is 11,677,591 shares. Due to an adjustment to the
conversion price of the convertible bonds due 2015, as a result of
the placing, the maximum number of ordinary shares that may be
issued upon conversion is 27,180,708 shares.
As at 31 December 2012, the
shareholders who held more than 5% of the shares and votes of
Talvivaara were Pekka Perä (20.7%), Solidium Oy (8.9%), Varma
Mutual Pension Insurance Company (8.7%) and Ilmarinen Mutual
Pension Insurance Company (8.7%).
Share based incentive
plans
The Annual General Meeting held on
3 May 2007 approved the Board of Directors' proposal to issue share
options to the Group's key personnel. The number of share options
is 6,999,300, each entitling to subscribe one new share. A total of
2,333,100 of the share options are designated 2007A, 2,333,100 are
designated as 2007B and 2,333,100 are designated as 2007C.
The Annual General Meeting held on
28 April 2011 approved the Board of Directors' proposal to issue
share options to the Group's key personnel. The number of share
options is 5,500,000, each entitling to subscribe one new share. A
total of 2,500,000 of the share options are designated 2011A,
1,500,000 are designated as 2011B and 1,500,000 are designated as
2011C. The share subscription periods for stock options 2011A,
2011B and 2011C are between 1 April 2014 and 31 March 2016, 1 April
2015 and 31 March 2017 and 1 April 2016 and 31 March 2018.
In December 2010, The Board of
Directors of the Company decided on a new shareholding plan
directed to members of executive management and certain other key
employees. The plan enabled the participants to acquire a
considerable long-term shareholding in the Company. Through this
plan, the participants personally invested a significant amount of
their own funds in the Company shares. Part of the investment is
financed by a loan provided by the Company.
The EUR 5.7 million loan granted
by the Company to Talvivaara Management Oy for the purpose of
acquiring Company shares carries an interest of 3.0% and shall be
repaid in full by 2014. The 1,104,000 shares held by Talvivaara
Management Oy have been pledged to the Company as security for the
loan.
During 2011, the Board of Directors, based on the recommendation of
the Remuneration Committee, allocated 952,000 2007C options, giving
an entitlement to subscribe for a total of 952,000 new shares in
the Company, to the personnel of Talvivaara and its subsidiaries.
Of the options allocated since 2007, 78,000 2007C options entitling
to subscribe for 78,000 shares were returned back to the Company
during 2011. In 2011, a total of 274,908 new shares were subscribed
for under the stock option rights 2007A and 48,763 with
2007B. At the end of 2011, 100 2007C options were available
for allocation under the 2007 Option Scheme. The voting rights of
the shares to be issued against the outstanding share options
amount to 2.6% of the total share capital.
During 2012, the Board of
Directors, based on the recommendation of the Remuneration
Committee, allocated 42,000 2007C options, giving an entitlement to
subscribe for a total of 42,000 new shares in the Company, and
1,347,500 2011B options, giving an entitlement to subscribe for a
total of 1,347,500 new shares in the Company, to the personnel of
Talvivaara and its subsidiaries. Of the options allocated since
2007, 48,000 2007C options entitling to subscribe for 48,000 shares
were returned back to the Company during 2012. In 2012, a total of
1,938,787 new shares were subscribed for under the stock option
rights 2007A. At the end of 2012, 2,500,000 2011A options, 152,500
2011B options and 1,500,000 2011C options were available for
allocation under the 2011 Option Scheme. The voting rights of the
shares to be issued against the outstanding share options amount to
2.1% of the total share capital.
Events after the review
period
Notification under the
Environmental Protection Act §62 to treat and release excess waters
from the mine area
Talvivaara submitted on 22 January 2013 a notification to the
Kainuu Centre for Economic Development, Transport and the
Environment ("Kainuu ELY Centre") under the Environmental
Protection Act §62 to treat and release excess waters from the mine
area. Under the notification, Talvivaara intends to treat and
release to nature by 30 June 2013 approximately 3.8 million m3 of
water currently stored in emergency dams and the open pit. The
water will be treated with neutralization agents, primarily lime
compounds, to remove metals from it and to increase its pH close to
neutral. The Group considers treatment and release of the water
necessary in order to mitigate the risk of flooding or uncontrolled
leakages during the spring melt. De-watering of the open pit is
also necessary for the Group to be able to re-start its ore
production, which has been suspended since September 2012 due to
the prevailing water balance situation.
Kainuu ELY Centre has on 12
February 2013 permitted Talvivaara to discharge 1.8 million m3 of
neutralised waste water into the Vuoksi and Oulujoki waterways,
such that 0.9 million m3 is discharged into each direction by 30
June 2013. Additionally Talvivaara can direct 0.5 million m3 of
waters currently in the open pit into the Kuusilampi pond in the
vicinity of the pit, and continue to discharge within the 1.3
million m3 discharge quota in its existing environmental
permit.
Talvivaara's original notification
under Section 62 of the Environmental Protection Act proposed a
discharge requirement of 3.8 million m3 in total. However,
Talvivaara considers these arrangements and the 1.3 million m3
quota in the existing environmental permit to enable the
commencement of planned water management arrangements and their
implementation in the short term. Talvivaara will commence the
neutralisation and discharge of waters from the mine site without
delay in accordance with the Kainuu ELY Centre decision.
Temporary
lay-offs
Talvivaara announced on 16 January 2013 that to support the Group's
cost savings initiatives and overall efficiency, and to adjust the
level of personnel to the temporarily suspended ore production,
Talvivaara is considering temporary lay-offs. Co-operation
consultations with employee representatives were held between 17
and 31 January 2013 concerning all personnel groups in all three
corporate entities, Talvivaara Mining Company Plc, Talvivaara
Sotkamo Ltd and Talvivaara Exploration Ltd.
Following the consultations,
Talvivaara will temporarily lay off 184 employees between 18
February and 30 June 2013. The maximum duration of the lay-off
period is 90 days per individual employee. Talvivaara currently
employs approximately 580 people in total.
Recent
operational highlights
Promising development in production processes:
-
All-time record average flow-rate of 1,422
m3/h through the
metals plant in January
-
98% process availability of the metals plant in
January
-
Strong evidence of leaching performance quickly
improving in heap sections from which excess water has been
removed
Actual year-to-date nickel production of 1,448t
until 12 February.
Management
re-organisation
The Company has re-organised its management during January and
February as follows:
-
Mr Pertti Pekkala, formerly General Manager,
Research and Development, was appointed Chief Production Officer
(Metals Recovery);
-
Mr Kari Vyhtinen, formerly Chief Investment
Officer, was appointed Chief Mining Officer;
-
Mr Mikko Korteniemi, formerly Chief Production
Officer (Metals Recovery), was appointed Chief Maintenance Officer
with responsibility for maintenance, procurement and warehousing;
and
-
Ms Maija Vidqvist was appointed General Manager,
Water Management (position previously held by Mr Jari
Voutilainen).
All four appointees are members of
the Executive Committee, with Mr Pertti Pekkala and Ms Maija
Vidqvist being new additions to it. Pertti Pekkala, Kari Vyhtinen
and Mikko Korteniemi report to the COO, Mr Harri Natunen, and Ms
Maija Vidqvist reports to the CEO, Mr Pekka Perä
Ms Maija Vidqvist, M. Sc. (Chem.
Eng.), appointed General Manager of Water Management, is Managing
Director of Teollisuuden Vesi Oy since 2003. Ms Vidqvist has
extensive experience in environmental and water treatment
technologies and processes across various industries and countries,
including e.g. membrane technology and reverse osmosis -based water
treatment.
With the reorganisation and
formation of a central maintenance unit comprising procurement,
warehousing and all maintenance activities, Iniesta aims to
optimise its maintenance operations and increasingly focus on
preventive maintenance for increased operational and cost
efficiency.
Financing arrangements
Proposed rights issue
To improve its liquidity and capital structure, the Company is
undertaking an underwritten Rights Issue. In connection with the
proposed Rights Issue, the Company has on 14 February 2013 entered
into a Standby Underwriting Letter with a group of banks, pursuant
to which the banks have undertaken to underwrite such portion of
the proposed Rights Issue that is not subject to shareholder
commitments. The Company's three key shareholders have given their
irrevocable commitments to subscribe in total 31.06 per cent of the
proposed Rights Issue, which the Board is confident will be able to
raise approximately EUR 260 million in gross proceeds. Proceeding
with and completion of the Rights Issue remains subject to
shareholder approval at an Extraordinary General Meeting to be held
on 8 March 2013.
Revolving credit
facility
The Company has renegotiated its EUR 100 million Revolving Credit
Facility and entered into an amended Facility Agreement on 14
February 2013, which, among other things, amended the financial and
production covenants in the previous Facility Agreement to be more
appropriate for the Group's current operations and, therefore,
reduces the Company's risk in relation to compliance with its
covenants. Successful completion of the Company's proposed Rights
Issue is a Condition Subsequent to the amended Facility.
Amendment Agreement with
Cameco
In order to ensure that the Group has sufficient liquidity until
the Company receives the proceeds from the proposed Rights Issue,
Talvivaara Sotkamo has on 12 February 2013 entered into an
amendment agreement with Cameco concerning the uranium take-in-kind
agreement pursuant to which the amount of the up-front investment
that Cameco is to pay to Talvivaara Sotkamo for the construction of
the uranium extraction facility was increased by USD 10 million to
USD 70 million, and the duration of the agreement extended to 31
December 2017 and commercial terms revised accordingly.
Amendment Agreement with
Nyrstar
Talvivaara Sotkamo has on14 February 2013 entered into an amendment
agreement with Nyrstar regarding the zinc in concentrate streaming
agreement pursuant to which Nyrstar is to make an up-front payment
of EUR 12 million to Talvivaara Sotkamo in return for Talvivaara
Sotkamo 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.
Short-term
outlook
Market outlook
The LME nickel price has somewhat
recovered in recent months, having reached its lowest monthly
average since mid-2009 of approximately USD 15,700/t in August. In
late January and early February 2013, nickel has traded at around
USD 18,000/t. Talvivaara expects volatility to remain high in the
near term, and nickel price development to be driven by global
growth prospects and forecast Chinese commodity demand in
particular.
Talvivaara foresees the nickel
industry fundamentals to support favourable nickel price
development in the longer term, driven by increasing marginal cost
of production across the nickel industry and lack of new committed
nickel projects to replace depleting supply after the next few
years. Talvivaara continues to see the longer term nickel price
support level at around USD 20,000/t.
Operational outlook
Talvivaara anticipates producing
approximately 18,000t of nickel and 39,000t of zinc in 2013. Metals
production will continue to be impacted by the water balance issues
in the first half of the year, but is expected to return to a clear
ramp-up during the remainder of the year driven by the re-start of
ore production in July. The operational expenditure including
leasing for 2013 is estimated at approximately EUR 230 million,
including EUR 10-15 million budgeted for the treatment and release
of excess waters from the mine area. Capital expenditure is
anticipated to amount to EUR 60 million, including approximately
EUR 20 million to be spent in water management with the target of
reaching a sustainable water balance situation at the mine
site.
Board of Directors proposal
for profit distribution
The Board of Directors is proposing to the Annual
General Meeting to be held on 25 April 2013 that no dividend is
declared in respect of the year 2012.
Talvivaara Mining Company Plc
Board of Directors
CONSOLIDATED INCOME STATEMENT |
|
|
(all amounts in EUR '000) |
Unaudited
three
months to
31 Dec 12 |
Unaudited
three
months to
31 Dec 11 |
Audited
twelve
months to
31 Dec 12 |
Audited
twelve
months to
31 Dec 11 |
Net
sales |
25,694 |
66,492 |
142,948 |
231,226 |
Other operating income |
65 |
268 |
4,061 |
2,304 |
Changes in inventories of
finished goods
and work in progress |
(6,425) |
17,491 |
50,264 |
59,727 |
Materials and services |
(20,057) |
(37,687) |
(117,848) |
(135,022) |
Personnel expenses |
(7,470) |
(6,353) |
(28,132) |
(25,482) |
Depreciation, amortization,
depletion and
impairment charges |
(15,424) |
(12,158) |
(53,698) |
(46,642) |
Other operating expenses |
(33,390) |
(13,121) |
(81,183) |
(55,211) |
Operating
profit (loss) |
(57,007) |
14,932 |
(83,588) |
30,900 |
Finance income |
31 |
236 |
811 |
1,196 |
Finance cost |
(13,794) |
(11,279) |
(46,515) |
(39,060) |
Finance income (cost) (net) |
(13,763) |
(11,043) |
(45,704) |
(37,864) |
Profit
(loss) before income tax |
(70,770) |
3,889 |
(129,292) |
(6,964) |
Income tax expense |
11,380 |
(161) |
25,381 |
1,748 |
Profit
(loss) for the period |
(59,390) |
3,728 |
(103,911) |
(5,216) |
Attributable to: |
|
|
|
|
Owners of the parent |
(57,644) |
1,915 |
(98,460) |
(8,263) |
Non-controlling interest |
(1,746) |
1,813 |
(5,451) |
3,047 |
|
(59,390) |
3,728 |
(103,911) |
(5,216) |
Earnings per share for profit (loss) attributable to the
owners of the parent (expressed
in EUR per share) |
Basic and diluted |
(0,22) |
0,01 |
(0,38) |
(0,04) |
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME |
(all amounts in EUR '000) |
Unaudited
three
months to
31 Dec 12 |
Unaudited
three
months to
31 Dec 11 |
Audited
twelve
months to
31 Dec 12 |
Audited
twelve
months to
31 Dec 11 |
Profit
(loss) for the period |
(59,390) |
3,728 |
(103,911) |
(5,216) |
Other
comprehensive income,
items net of tax |
|
|
|
|
Cash flow hedges |
- |
(1,983) |
- |
(9,368) |
Other
comprehensive income,
net of tax |
- |
(1,983) |
- |
(9,368) |
Total
comprehensive income |
(59,390) |
1,745 |
(103,911) |
(14,584) |
Attributable to: |
|
|
|
|
Owners of the parent |
(57,644) |
249 |
(98,460) |
(16,132) |
Non-controlling interest |
(1,746) |
1,496 |
(5,451) |
1,548 |
|
(59,390) |
1,745 |
(103,911) |
(14,584) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
(all amounts in EUR '000) |
Audited
as at
31 Dec 12 |
Audited
as at
31 Dec11 |
ASSETS |
|
|
Non-current
assets |
|
|
Property, plant and
equipment |
809,452 |
761,985 |
Biological assets |
9,125 |
7,688 |
Intangible assets |
7,014 |
7,371 |
Investments in associates |
5,694 |
- |
Deferred tax assets |
52,588 |
26,398 |
Other receivables |
2,940 |
2,902 |
Available-for-sale financial
assets |
2 |
630 |
|
886,815 |
806,974 |
Current
assets |
|
|
Inventories |
297,761 |
240,436 |
Trade receivables |
32,174 |
64,027 |
Other receivables |
7,980 |
5,249 |
Derivative financial
instruments |
- |
10 |
Cash and cash equivalent |
36,058 |
40,019 |
|
373,973 |
349,741 |
Total
assets |
1,260,788 |
1,156,715 |
EQUITY AND
LIABILITIES |
|
|
Equity
attributable to owners of the parent |
|
|
Share capital |
80 |
80 |
Share issue |
- |
278 |
Share premium |
8,086 |
8,086 |
Other reserves |
539,559 |
449,532 |
Retained earnings |
(251,365) |
(151,129) |
|
296,360 |
306,847 |
Non-controlling interest in
equity |
10,392 |
15,733 |
Total
equity |
306,752 |
322,580 |
Non-current
liabilities |
|
|
Borrowings |
506,028 |
467,161 |
Advance payments |
265,847 |
235,568 |
Other payables |
228 |
- |
Provisions |
11,290 |
6,036 |
|
783,393 |
708,765 |
Current
liabilities |
|
|
Borrowings |
93,793 |
28,515 |
Advance payments |
7,857 |
11,684 |
Trade payables |
25,577 |
33,678 |
Other payables |
27,178 |
51,478 |
Provisions |
16,238 |
- |
Derivative financial
instruments |
- |
15 |
|
170,643 |
125,370 |
Total
liabilities |
954,036 |
834,135 |
Total
equity and liabilities |
1,260,788 |
1,156,715 |
CONSOLIDATED STATEMENT OF
CHANGES IN SHAREHOLDERS' EQUITY
A. Share capital
B. Share issue
C. Share premium
D. Hedge reserve
E. Invested unrestricted equity
F. Other reserves
G. Retained earnings
H. Total
I.
Non-controlling interest
J.
Total equity
(all amounts in EUR
'000) |
|
|
|
|
|
|
|
|
|
A |
B |
C |
D |
E |
F |
G |
H |
I |
J |
|
1 Jan
11 |
80 |
91 |
8,086 |
7,494 |
401,612 |
31,400 |
(80,068) |
368,
695 |
16,
894 |
385,
589 |
|
Profit (loss)
for the period |
- |
- |
- |
- |
- |
- |
(8,263) |
(8,
263) |
3,
047 |
(5,
216) |
|
Other
comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
- Cash flow
hedges |
- |
- |
- |
(7,869) |
- |
- |
- |
(7,
869) |
(1,
499) |
(9,
368) |
|
Total
comprehensive
income for the period |
- |
- |
- |
(7,869) |
- |
- |
(8,263) |
(16,
132) |
1,
548 |
(14,
584) |
|
Transactions
with owners |
|
|
|
|
|
|
|
|
|
|
|
Stock options |
- |
187 |
- |
- |
657 |
- |
- |
844 |
- |
844 |
|
Senior unsecured
convertible bonds
due 2015 |
- |
- |
- |
- |
1,800 |
- |
- |
1,
800 |
- |
1,
800 |
|
Acquisition of subsidiary |
- |
- |
- |
375 |
- |
997 |
(60,907) |
(59,
535) |
(2,
349) |
(61,
884) |
|
Perpetual
capital loan |
- |
- |
- |
- |
- |
- |
(1,891) |
(1,
891) |
(360) |
(2,
251) |
|
Incentive
arrangement
for Executive
Management |
- |
- |
- |
- |
- |
94 |
- |
94 |
- |
94 |
|
Senior unsecured
convertible bonds
due 2015, equity
component |
- |
- |
- |
- |
- |
9,018 |
- |
9,
018 |
- |
9,
018 |
|
Employee share
option scheme |
|
|
|
|
|
|
|
|
|
|
|
- value of
employee services |
- |
- |
- |
- |
- |
3,954 |
- |
3,
954 |
- |
3,
954 |
|
Total contribution
by and distribution
to owners |
- |
187 |
- |
375 |
2,457 |
14,063 |
(62,798) |
(45,
716) |
(2,
709) |
(48,
425) |
|
Total
transactions
with owners |
- |
187 |
- |
375 |
2,457 |
14,063 |
(62,798) |
(45,
716) |
(2,
709) |
(48,
425) |
|
31 Dec
11 |
80 |
278 |
8,086 |
- |
404,069 |
45,463 |
(151,129) |
306,
847 |
15,
733 |
322,
580 |
|
1 Jan
12 |
80 |
278 |
8,086 |
- |
404,069 |
45,463 |
(151,129) |
306,
847 |
15,
733 |
322,
580 |
|
Profit (loss)
for the period |
- |
- |
- |
- |
- |
- |
(98,460) |
(98,
460) |
(5,
451) |
(103,
911) |
|
Other
comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
- Cash flow hedges |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
Total
comprehensive
income for the period |
- |
- |
- |
- |
- |
- |
(98,460) |
(98,
460) |
(5,
451) |
(103,
911) |
|
Transactions
with owners |
|
|
|
|
|
|
|
|
|
|
|
Stock options |
- |
(278) |
- |
- |
5,198 |
- |
- |
4,
920 |
- |
4,
920 |
|
Senior unsecured
convertible bonds
due 2013 |
- |
- |
- |
- |
- |
(252) |
- |
(252) |
- |
(252) |
|
Perpetual capital loan |
- |
- |
- |
- |
- |
2,354 |
(1,776) |
578 |
110 |
688 |
|
Share issue |
- |
- |
- |
- |
81,482 |
- |
- |
81,
482 |
- |
81,
482 |
|
Incentive arrangement
for Executive
Management |
- |
- |
- |
- |
- |
94 |
- |
94 |
- |
94 |
|
Employee share
option scheme |
|
|
|
|
|
|
|
|
|
|
|
- value of employee services |
- |
- |
- |
- |
- |
1,151 |
- |
1,
151 |
- |
1,
151 |
|
Total contribution
by and
distribution
to owners |
- |
(278) |
- |
- |
86,680 |
3,347 |
(1,776) |
87,
973 |
110 |
88,
083 |
|
Total
transactions
with owners |
- |
(278) |
- |
- |
86,680 |
3,347 |
(1,776) |
87,
973 |
110 |
88,
083 |
|
31 Dec
12 |
80 |
- |
8,086 |
- |
490,749 |
48,810 |
(251,365) |
296,
360 |
10,
392 |
306,
752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CASH FLOWS |
|
|
(all amounts in EUR '000) |
Unaudited
three
months to
31 Dec 12 |
Unaudited
three
months to
31 Dec 11 |
Audited
twelve
months to
31 Dec 12 |
Audited
twelve
months to
31 Dec 11 |
Cash flows
from operating activities |
|
|
|
|
Profit (loss) for the period |
(59,390) |
3,728 |
(103,911) |
(5,216) |
Adjustments for |
|
|
|
|
Tax |
(11,380) |
161 |
(25,381) |
(1,748) |
Depreciation and
amortization |
15,424 |
12,158 |
53,698 |
46,642 |
Other non-cash income and
expenses |
16,526 |
(8,171) |
(2,813) |
(34,987) |
Interest income |
(31) |
(235) |
(811) |
(1,196) |
Fair value gains on financial
assets at fair value through profit or loss |
11 |
(195) |
(5) |
(522) |
Interest expense |
13,794 |
11,279 |
46,515 |
39,060 |
|
(25,046) |
18,725 |
(32,708) |
42,033 |
Change in working capital |
|
|
|
|
Decrease(+)/increase(-) in other
receivables |
19,043 |
(16,762) |
29,336 |
(2,379) |
Decrease (+)/increase (-) in
inventories |
4,166 |
(15,398) |
(57,325) |
(65,075) |
Decrease(-)/increase(+) in trade
and other payables |
(12,440) |
(8,430) |
(37,843) |
(404) |
Change in working capital |
10,769 |
(40,590) |
(65,832) |
(67,858) |
|
(14,277) |
(21,865) |
(98,540) |
(25,825) |
Interest and other finance cost
paid |
(15,279) |
(10,579) |
(28,654) |
(24,666) |
Interest and other finance
income |
78 |
274 |
554 |
1,329 |
Income taxes paid |
- |
(15) |
- |
(15) |
Net cash
generated (used) in operating activities |
(29,478) |
(32,185) |
(126,640) |
(49,177) |
Cash flows
from investing activities |
|
|
|
|
Acquisition of subsidiary, net of
cash acquired |
- |
(398) |
- |
(61,885) |
Investments in associates |
(93) |
- |
(5,066) |
- |
Purchases of property, plant and
equipment |
(29,531) |
(21,511) |
(97,171) |
(78,833) |
Purchases of biological
assets |
(55) |
(18) |
(55) |
(82) |
Purchases of intangible
assets |
(12) |
(54) |
(225) |
(229) |
Proceeds from sale of property,
plant and equipment |
- |
- |
18 |
19,995 |
Proceeds from sale of biological
assets |
207 |
- |
308 |
257 |
Proceeds from sale of intangible
assets |
- |
- |
- |
5 |
Purchases of financial assets at
fair value through profit or loss |
- |
- |
- |
(12,010) |
Purchases of available-for-sale
financial assets |
- |
- |
- |
(167) |
Proceeds from sale of |
|
|
|
|
financial assets at fair value
through profit or loss |
- |
- |
- |
12,022 |
Net cash
generated (used) in investing activities |
(29,484) |
(21,981) |
(102,191) |
(120,927) |
Cash flows
from financing activities |
|
|
|
|
Proceeds from share issue net of
transactions costs |
- |
- |
81,108 |
- |
Realised stock options |
- |
278 |
4,920 |
845 |
Proceeds from interest-bearing
liabilities |
- |
59,226 |
130,000 |
70,242 |
Perpetual capital loan |
- |
- |
- |
(3,042) |
Proceeds from advance
payments |
9,731 |
7,381 |
32,080 |
14,381 |
Buy-back of convertible
bonds |
- |
- |
(8,168) |
- |
Payment of interest-bearing
liabilities |
(2,017) |
(11,255) |
(15,070) |
(37,858) |
Net cash
generated (used) in financing activities |
7,714 |
55,630 |
224,870 |
44,568 |
Net
increase (decrease) in cash and cash equivalents |
(51,248) |
1,464 |
(3,961) |
(125,536) |
Cash and cash equivalents at
beginning of the period |
87,306 |
38,555 |
40,019 |
165,555 |
Cash and
cash equivalents at end of the period |
36,058 |
40,019 |
36,058 |
40,019 |
|
|
|
|
|
|
|
NOTES
1. Basis of
preparation
This year-end report has been
prepared in compliance with IAS 34.
The interim financial information
set out herein has been prepared on the same basis and using the
same accounting policies as were applied in drawing up the Group's
statutory financial statements for the year ended 31 December
2012.
2. Property,
plant and equipment |
|
|
|
|
|
(all amounts in EUR '000) |
Machinery
and
equipment |
Construction
in
progress |
Land
and
buildings |
Other
tangible
assets |
Total |
Gross carrying amount at 1 Jan
12 |
361,245 |
41,344 |
273,921 |
224,796 |
901,306 |
Additions |
2,464 |
98,108 |
28 |
- |
100,600 |
Disposals |
(35) |
- |
- |
- |
(35) |
Transfers |
13,067 |
(25,074) |
7,260 |
4,683 |
(64) |
Gross carrying amount at 31 Dec
12 |
376,741 |
114,378 |
281,209 |
229,479 |
1,001,807 |
Accumulated depreciation
and
impairment losses at 1 Jan 12 |
66,791 |
- |
32,644 |
39,886 |
139,321 |
Disposals |
(17) |
- |
- |
- |
(17) |
Depreciation for the period |
29,903 |
- |
12,274 |
8,321 |
50,498 |
Accelerated depreciation charges |
- |
- |
- |
2,553 |
2,553 |
Accumulated depreciation
and
impairment losses at 31 Dec 12 |
96,677 |
- |
44,918 |
50,760 |
192,355 |
Carrying amount at 1 Jan 12 |
294,454 |
41,344 |
241,277 |
184,910 |
761,985 |
Carrying
amount at 31 Dec 12 |
280,064 |
114,378 |
236,291 |
178,719 |
809,452 |
3. Trade
receivables |
|
|
(all amounts in EUR '000) |
|
|
|
31 Dec 12 |
31 Dec 11 |
Nickel-Cobalt sulphide |
25,254 |
55,258 |
Zinc sulphide |
6,912 |
8,769 |
Copper sulphide |
8 |
- |
Total trade
receivables |
32,174 |
64,027 |
4.
Inventories |
|
|
(all amounts in EUR '000) |
|
|
|
31 Dec 12 |
31 Dec 11 |
Raw materials and
consumables |
21,077 |
14,016 |
Work in progress |
272,775 |
213,629 |
Finished products |
3,909 |
12,791 |
Total
inventories |
297,761 |
240,436 |
5.
Borrowings |
|
|
(all amounts in EUR '000) |
|
|
Non-current |
31 Dec 12 |
31 Dec 11 |
Capital loans |
1,405 |
1,405 |
Investment and Working Capital
loan |
51,600 |
57,863 |
Senior Unsecured Bonds due
2017 |
108,683 |
- |
Revolving Credit Facility |
69,451 |
49,110 |
Senior Unsecured Convertible
Bonds due 2015 |
225,875 |
217,138 |
Senior Unsecured Convertible
Bonds due 2013 |
- |
80,796 |
Finance lease liabilities |
30,748 |
37,444 |
Other |
18,266 |
23,405 |
|
506,028 |
467,161 |
Current |
|
|
Investment and Working Capital
loan |
6,430 |
1,430 |
Senior Unsecured Convertible
Bonds due 2013 |
75,805 |
- |
Commercial papers |
- |
8,481 |
Finance lease liabilities |
11,558 |
18,604 |
|
93,793 |
28,515 |
|
|
|
Total
borrowings |
599,821 |
495,676 |
Non-current |
31 Dec 12 |
31 Dec 11 |
Deferred zinc sales revenue |
219,385 |
221,187 |
Deferred uranium sales
revenue |
46,462 |
14,381 |
|
265,847 |
235,568 |
Current |
|
|
Deferred zinc sales revenue |
7,790 |
11,684 |
Other |
67 |
- |
|
7,857 |
11,684 |
|
|
|
Total
advance payments |
273,704 |
247,252 |
6. Advance
payments |
|
|
(all amounts in EUR '000) |
|
|
Non-current |
31 Dec 12 |
31 Dec 11 |
Deferred zinc sales revenue |
219,385 |
221,187 |
Deferred uranium sales
revenue |
46,462 |
14,381 |
|
265,847 |
235,568 |
Current |
|
|
Deferred zinc sales revenue |
7,790 |
11,684 |
Other |
67 |
- |
|
7,857 |
11,684 |
|
|
|
Total
advance payments |
273,704 |
247,252 |
7.
Provisions |
|
|
|
|
|
|
Gypsum
pond
leakage |
Water
balance
management |
Environmental
restoration |
Mining
fee |
Total |
31 Dec
10 |
- |
- |
3,784 |
151 |
3,935 |
Charged/(credited) to the income
statement: |
|
|
|
|
|
Additional provisions |
- |
- |
2,098 |
- |
2,098 |
Unused amounts reversed |
- |
- |
- |
(40) |
(40) |
Unwinding of discount |
- |
- |
43 |
- |
43 |
31 Dec
11 |
- |
- |
5,925 |
111 |
6,036 |
Charged/(credited) to the income
statement: |
|
|
|
|
|
Additional provisions |
12,156 |
9,082 |
216 |
43 |
21,497 |
Unwinding of discount |
- |
- |
(5) |
- |
(5) |
31 Dec
12 |
12,156 |
9,082 |
6,136 |
154 |
27,528 |
The non-current and
current portions of provisions
are as follows: |
|
2012 |
2011 |
Non-current |
|
|
Gypsum pond leakage |
5,000 |
- |
Environmental restoration |
6,136 |
5,925 |
Mining fee |
154 |
111 |
|
11,290 |
6,036 |
Current |
|
|
Gypsum pond leakage |
7,156 |
- |
Water balance management |
9,082 |
- |
|
16,238 |
- |
Total |
27,528 |
6,036 |
8.
Changes in the number of shares issued |
|
Number of shares |
|
31 Dec
11 |
245,781,803 |
|
Stock options 2007A |
1,938,787 |
|
Share issue |
24,589,050 |
|
31 Dec
12 |
272,309,640 |
|
9.
Contingencies and commitments |
|
|
(all amounts in EUR '000) |
|
|
The future aggregate minimum lease payments
under |
non-cancellable operating leases |
|
|
|
31 Dec 12 |
31 Dec 11 |
Not later than 1 year |
1,910 |
1,919 |
Later than 1 year and not later
than 5 years |
1,036 |
929 |
Later than 5 years |
47 |
37 |
|
2,993 |
2,885 |
Capital
commitments
At 31 December 2012, the Group had
capital commitments amounting to EUR 15.1 million (31 December
2011: EUR 14.5 million) principally relating to the completion of
the Talvivaara mine, improving the reliability and expansion of
production capacity. These commitments are for the acquisition of
new property, plant and equipment.
Talvivaara
Mining Company Plc |
|
|
|
|
|
Key financial
figures of the Group |
|
|
|
|
|
|
|
Three
months to
31 Dec 12 |
Three
monthsto
31 Dec 11 |
Twelve
months to
31 Dec12 |
Twelve
months to
31 Dec 11 |
Net sales |
EUR '000 |
25,694 |
66,492 |
142,948 |
231,226 |
Operating profit (loss) |
EUR '000 |
(57,007) |
14,932 |
(83,588) |
30,900 |
Operating profit (loss)
percentage |
|
-221,9 % |
22,5 % |
-58,5 % |
13,4 % |
Profit (loss) before tax |
EUR '000 |
(70,770) |
3,889 |
(129,292) |
(6,964) |
Profit (loss) for the period |
EUR '000 |
(59,390) |
3,728 |
(103,911) |
(5,216) |
Return on equity |
|
-17,7 % |
1,2 % |
-33,0 % |
-1,5 % |
Equity-to-assets ratio |
|
24,3 % |
27,9 % |
24,3 % |
27,9 % |
Net interest-bearing debt |
EUR '000 |
563,763 |
455,657 |
563,763 |
455,657 |
Debt-to-equity ratio |
|
183,8 % |
141,3 % |
183,8 % |
141,3 % |
Return on investment |
|
-4,9 % |
1,9 % |
-6,7 % |
4,0 % |
Capital expenditure |
EUR '000 |
29,598 |
21,583 |
97,451 |
79,144 |
Property, plant and
equipment |
EUR '000 |
809,452 |
761,985 |
809,452 |
761,985 |
Derivative financial
instruments |
EUR '000 |
- |
(5) |
- |
(5) |
Borrowings |
EUR '000 |
599,821 |
495,676 |
599,821 |
495,676 |
Cash and cash
equivalents
at the end of the period |
EUR '000 |
36,058 |
40,019 |
36,058 |
40,019 |
Share-related
key figures |
|
|
|
|
|
|
|
Three
months to
31 Dec 12 |
Three
months to
31 Dec 11 |
Twelve
months to
31 Dec 12 |
Twelve
months to
31 Dec 11 |
Earnings per share |
EUR |
(0,22) |
0,01 |
(0,38) |
(0,04) |
Equity per share |
EUR |
1,11 |
1,25 |
1,11 |
1,25 |
Development of share price at
London Stock Exchange |
|
|
|
|
|
Average trading price1 |
EUR |
1,35 |
2,57 |
2,50 |
4,22 |
|
GBP |
1,09 |
2,20 |
2,02 |
3,66 |
Lowest trading price1 |
EUR |
1,03 |
2,28 |
1,03 |
2,25 |
|
GBP |
0,83 |
1,95 |
0,83 |
1,95 |
Highest trading price1 |
EUR |
1,99 |
2,98 |
4,43 |
7,17 |
|
GBP |
1,61 |
2,55 |
3,59 |
6,22 |
Trading price at the end of the
period2 |
EUR |
1,25 |
2,39 |
1,25 |
2,39 |
|
GBP |
1,02 |
2,00 |
1,02 |
2,00 |
Change during the period |
|
-32,8 % |
-20,6 % |
-48,8 % |
-66,4 % |
Price-earnings ratio |
|
neg. |
463,2 |
neg. |
neg. |
Market capitalization at the
end
of the period3 |
EUR '000 |
341,597 |
588,487 |
341,597 |
588,487 |
|
GBP '000 |
278,777 |
491,564 |
278,777 |
491,564 |
Development in trading
volume |
|
|
|
|
|
Trading volume |
1000 shares |
23,737 |
25,743 |
103,218 |
67,799 |
In relation to weighted average
number of shares |
|
8,9 % |
10,5 % |
38,7 % |
27,6 % |
Development of share price
at
OMX Helsinki |
|
|
|
|
|
Average trading price |
EUR |
1,31 |
2,55 |
2,31 |
4,33 |
Lowest trading price |
EUR |
1,08 |
2,27 |
1,08 |
2,27 |
Highest trading price |
EUR |
2,00 |
2,98 |
4,35 |
7,34 |
Trading price at the end of
the
period |
EUR |
1,24 |
2,49 |
1,24 |
2,49 |
Change during the period |
|
-34,5 % |
-16,2 % |
-50,2 % |
-64,8 % |
Price-earnings ratio |
|
neg. |
459,3 |
neg. |
neg. |
Market capitalization at the
end
of the period |
EUR '000 |
338,209 |
612,488 |
338,209 |
612,488 |
Development in trading
volume |
|
|
|
|
|
Trading volume |
1000 shares |
62,472 |
73,918 |
209,565 |
190,901 |
In relation to weighted
average
number of shares |
|
23,4 % |
30,1 % |
78,5 % |
77,7 % |
Adjusted average number of
shares |
|
266,846,084 |
245,601,204 |
266,846,084 |
245,601,204 |
Fully diluted average
number
of shares |
|
265,742,084 |
244,497,204 |
265,742,084 |
244,497,204 |
Number of shares at the
end
of the period |
|
272,309,640 |
245,781,803 |
272,309,640 |
245,781,803 |
1) Trading
price is calculated on the average of EUR/GBP exchange rates
published by the European Central Bank during the period.
2) Trading
price is calculated on the EUR/GBP exchange rate published by the
European Central Bank at the end of the period.
3) Market
capitalization is calculated on the EUR/GBP exchange rate published
by the European Central Bank at the end of the period.
Employee-related key figures |
|
|
|
|
|
|
|
Three
months to
31 Dec 12 |
Three
months to
31 Dec 11 |
Twelve
months to
31 Dec 12 |
Twelve
months to
31 Dec 11 |
Wages and salaries |
EUR '000 |
5,982 |
5,385 |
23,080 |
21,574 |
Average number of employees |
|
584 |
451 |
547 |
445 |
Number of employees at
the
end of the period |
|
588 |
461 |
588 |
461 |
Other
figures |
|
|
|
|
|
Three
months to
31 Dec 12 |
Three
months to
31 Dec 11 |
Twelve
months to
31 Dec 12 |
Twelve
months to
31 Dec 11 |
Share options
outstanding
at the end of the period |
5,958,837 |
6,501,151 |
5,958,837 |
6,501,151 |
Number of shares to be
issued
against the outstanding share options |
5,958,837 |
6,501,151 |
5,958,837 |
6,501,151 |
Rights to vote of shares to be
issued
against the outstanding share options |
2,1 % |
2,6 % |
2,1 % |
2,6 % |
Key financial figures of the Group |
Return on equity |
Profit (loss) for the period |
|
(Total equity at the beginning of
period + Total equity at the end of period)/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 |
|
|
Return on investment |
Profit (loss) for the period + Finance cost |
|
(Total equity at the beginning of
period + Total equity at the end of period)/2
+ (Borrowings at the beginning of period + Borrowings at the end of
period)/2 |
|
|
Share-related key figures |
|
|
|
Earnings per share |
Profit (loss) attributable to equity holders of the
Company |
|
Adjusted average number of
shares |
|
|
Equity per share |
Equity attributable to equity holders of the Company |
|
Adjusted average number of
shares |
|
|
Price-earnings ratio |
Trading price at the end of the period |
|
Earnings per share |
|
|
Market capitalization
at the end of the period |
Number of shares at the end of
the period * trading price at the end of the period |
Talvivaara annual results review
for the year ended 31 Dec 12
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
ONE
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