2015-04-30 15:30:55 CEST
2015-04-30 15:31:57 CEST
REGULATED INFORMATION
Talvivaaran Kaivososakeyhtiö Oyj - Interim Management statement
Talvivaara Mining Company Plc's Interim Management Statement for the period of 1 January 2015 - 30 April 2015
Stock Exchange Release
Talvivaara Mining Company Plc
30 April 2015
Talvivaara Mining Company Plc's Interim Management Statement for the period of
1 January 2015 - 30 April 2015
As announced by Talvivaara Mining Company Plc ("Talvivaara" or the "Company") on
31 December 2014 the Company will release interim management statements in
accordance with the Finnish Securities Markets Act, Chapter 7, Section 14 for
the first three and nine months of the accounting year 2015 instead of the
interim reports for the respective periods.
Based on the above, Talvivaara gives the following report for the period of 1
January 2015 - 30 April 2015:
Key events
* Following the announcement of the bankruptcy of Talvivaara Sotkamo, trading
of Talvivaara's shares on the Helsinki Stock Exchange was suspended on 6
November 2014. The suspension of trading continues on the date of this
statement
* Talvivaara finances its operations by providing administrative and technical
services and by leasing certain critical machinery and equipment to the
bankruptcy estate of Talvivaara Sotkamo under agreements entered into by the
Company and the bankruptcy estate on 19 November 2014
* Talvivaara is continuing its operations for the time being with the target
of securing sufficient financing to participate in the acquisition of the
mining operations from the bankruptcy estate of Talvivaara Sotkamo or
securing a different financial and/or operative arrangement that will secure
the continuance of the Company's eligible business
* Following the termination notice by the bankruptcy estate of Talvivaara
Sotkamo on 30 March 2015, Nyrstar contested the right of the bankruptcy
estate to terminate the Zinc Streaming Agreement or the Streaming Holiday
Agreement. Simultaneously, Nyrstar sent a notice to the Company, reserving
their right to issue a demand to the Company as a guarantor for a payment of
all sums due by Talvivaara Sotkamo under the Zinc Streaming Agreement and
the Streaming Holiday Agreement, should the bankruptcy estate of Talvivaara
Sotkamo fail to do so. Due to previous intercreditor arrangements, the
extent of the Company's guarantee liability towards Nyrstar remains unclear
* Talvivaara's corporate reorganisation proceedings were commenced on 29
November 2013 and are still on-going. The Espoo District Court has on 30
January 2015 extended the deadline for the re-submission of the
restructuring programme until 13 March 2015
* The supplemented draft restructuring programme of the Company was submitted
by the Administrator to the District Court of Espoo on 13 March 2015,
proposing a haircut of 99% for the unsecured restructuring debts and leaving
1% of the amount of such debt to be repaid. The restructuring debts secured
by business mortgage would not be cut and no payments would be made on debts
with lowest priority. The draft restructuring programme does not include a
provision on a duty to make supplementary payments
* The confirmation and entry into force of the draft restructuring programme
requires the fulfilment of a number of conditions, including Talvivaara
negotiating an agreement with the party that purchases Talvivaara Sotkamo
mining operations based on which Talvivaara can obtain sufficient cash flow
to cover the costs of its business operations and has the right to make an
investment sufficient to acquire a significant minority stake in the Sotkamo
operations, or Talvivaara completes a different financial and/or operative
arrangement that will secure the continuance of the Company's eligible
business
* On 14 April 2015, the District Court of Espoo initiated a creditors' voting
procedure on the draft restructuring programme. The approval of the draft
restructuring programme requires express support from the necessary number
of creditors. The voting period expires on 6 May 2015
Review of operations
Following the bankruptcy of Talvivaara Sotkamo on 6 November 2014, Talvivaara
has not had control over the operations at the Sotkamo mine and is therefore no
longer in a position to continue reporting on the status and development of the
Sotkamo mining operations, including information on production levels and water
management. Following the announcement of the bankruptcy of Talvivaara Sotkamo,
trading of Talvivaara's shares on the Helsinki Stock Exchange was suspended on
6 November 2014. The suspension of trading continues on the date of this
statement..
Prior to the bankruptcy, the activities of the Talvivaara group comprised of the
operations at the Talvivaara mine primarily carried out by Talvivaara Sotkamo
and a broad range of support functions and expert services provided by the
Company. Throughout its existence, the Company has employed the majority of the
group's managerial resources and technical experts and therefore provided the
operating subsidiary with e.g. administrative, financial, communications,
technical, laboratory, commercial, legal and sustainability services against
agreed fees. In addition, the Company owns a lime and limestone handling plant
and reception station, which are critical for the production and water treatment
processes of the mine, and which the Company has leased to Talvivaara Sotkamo
since 2009.
In order to minimise any environmental risks, assist the running of the ongoing
operations and to facilitate the sales process of the mining assets, Talvivaara
and the bankruptcy estate of Talvivaara Sotkamo agreed that the services and
equipment leases provided by the Company shall continue. To this effect, the
parties entered on 19 November 2014 into the Administration and Laboratory
Services Agreement and the Agreement on Lease of Lime and Limestone Handling
Plant and Reception Station. The agreements detail the Company's personnel
resources and equipment that are available and critical for the environmentally
and occupationally safe operations at the Sotkamo mine and state the agreed
pricing for the services provided. Invoicing of personnel resources is based on
hourly rates, expenses incurred in the provision of the services are charged at
cost added with an administrative margin, and for the limestone plant a monthly
rent has been agreed. The new agreements are largely in line with those
previously in place between Talvivaara and Talvivaara Sotkamo with only minor
modifications resulting from the changed circumstances following Talvivaara
Sotkamo's bankruptcy.
Financial status
Liquidity development
Currently the Company finances its day-to-day operations by providing
administrative and technical services and leasing certain critical machinery and
equipment to the bankruptcy estate of Talvivaara Sotkamo. The target of the
Company is to secure sufficient financing to participate, as a member of a
consortium, in the acquisition of the mining operations from the bankruptcy
estate of Talvivaara Sotkamo Ltd or to complete a different financial and/or
operative arrangement that will secure the continuance of the Company's eligible
business.
During the reporting period, costs relating to the preparation of the Company's
2014 financial statements as well as the costs relating to the completion of the
Company's draft restructuring programme and arrangement of the creditors' voting
procedure have temporarily increased the cost basis. As at 30 April 2015, the
Company's cash and cash equivalents amount to EUR 4.3 million.
Equity
Following Talvivaara Sotkamo's bankruptcy, the Company has fully written off its
receivables from and the shares held in Talvivaara Sotkamo. As a result,
Talvivaara has lost its equity, which has been acknowledged by the Company's
Board of Directors and notified to the trade register. Talvivaara further notes
that it has already in November 2013 recognised the weakening of its financial
position and taken measures to mitigate this by applying for corporate
reorganisation. The corporate reorganisation proceedings of the Company were
commenced on 29 November 2013 and their continuation was approved by the
Company's shareholders on 12 June 2014.
Off-balance sheet and contingent liabilities
Talvivaara Sotkamo has largely covered the environmental bond requirement under
the current environmental permit by a guarantee insurance provided by Atradius
Credit Insurance NV ("Atradius"). The coverage currently amounts to EUR 31.9
million. According to the environmental permit, the required bond is to be
placed to cover the cost of the restoration of waste areas (gypsum ponds, heap
areas), which is anticipated to take place partly during the life of the mine,
as waste areas are filled to their maximum levels, and partly as part of the
eventual closure of the mine. In the event such restoration activities took
place without Talvivaara Sotkamo carrying the cost, the expenses would initially
be covered by Atradius. However, eventually Atradius would claim the cost back
from the Company, which has given counter-indemnity for such costs to Atradius.
The guaranteed liability is part of the Company's restructuring debt and any
payments that fall due under the guarantee are finally determined in the
Company's restructuring programme and repaid according to the authorized paymentschedule.
Furthermore, even if the Company's restructuring debts were cut in accordance
with the Administrator's final draft restructuring programme, the assets of the
Company would still be less than the aggregate amount of the Company's remaining
liabilities following the 99-percent-haircut of the unsecured restructuring
debts or even following a 100% conversion of the unsecured restructuring debts
into equity of the Company. The exact amount of the negative funding balance
will depend, among others, on the extent to which unsecured restructuring debts
are converted into equity of the Company, and on the aggregate amount of the
Company's other liabilities not subject to restructuring at the date of entry
into force of the restructuring programme.
Progress of corporate reorganisation
The corporate reorganisation proceedings of Talvivaara were commenced on 29
November 2013. The Administrator has subsequently on 30 September 2014 submitted
a preliminary restructuring programme proposal for the Company to the Espoo
District Court.
On 30 January 2015, the District Court of Espoo granted an extension to the
deadline for re-submitting the proposal for the reorganisation programme of
Talvivaara until 13 March 2015.
The Administrator has on 5 February 2015 decided to repay the minor debts of the
Company under the exception rule of section 18 of the Finnish Act on Corporate
Restructuring. Restructuring debts amounting to less than EUR 1,000 (including
interest and penalty interest, to the extent claimed by the creditors, until the
start of the reorganization proceedings) have been considered minor debts. The
Company has repaid such minor debts during February 2015. The total of such
payments amounted to EUR 15,672, comprising of receivables a total of 40
creditors.
On 12 March 2015, Talvivaara was informed that Audley Capital Advisors LLP, a
UK-based investment and capital advisory firm, has entered into a conditional
asset purchase agreement to acquire the assets of Talvivaara Sotkamo from its
bankruptcy estate. At the same time, the Republic of Finland, through its
wholly-owned special purpose company Terrafame Ltd, has entered into an
investment agreement with Audley Capital Advisors LLP. The purpose of the asset
purchase agreement and the investment agreement is to re-establish the
operations and continue the business of the Sotkamo mine within a new mining
company that will be established in connection with the transaction. Before the
transaction can close and operations at the mine can be ramped up under the
direction of the new mining company, a number of steps must still take place
including the provision of the necessary regulatory permits and the obtaining of
committed financing. The Company announced on 12 March 2015 that the process of
selling the Sotkamo mining operations had progressed in the expected sequence,
and the milestone reached by the parties to the conditional asset purchase
agreement enables the start of serious discussions on Talvivaara's potential
role in the future of the Sotkamo mining operations.
On 13 March 2015, the Administrator of the corporate reorganisation of
Talvivaara filed the supplemented draft restructuring programme to the District
Court of Espoo. The supplemented draft restructuring programme was based on the
plan presented in the original draft restructuring programme dated 30 September
2014, whereby the business operations of the mine are to be sold to a new
company with which Talvivaara shall have a sufficient functional connection that
is based on ownership, operations or other type of economic co-operation.
The total amount of the restructuring debts to be taken into account in the
restructuring proceedings is approximately 513 million euros, out of which 508
million euros is considered unsecured debt. This amount does not include debts
with lowest priority. In addition, the Company has approximately 8 million euros
liability relating to a granted third-party security. The Administrator proposed
that the restructuring debts be cut by 99% which would leave 1% of the amount of
such debt to be repaid. The restructuring debts secured by business mortgage
will not be cut and no payments would be made on debts with lowest priority. The
draft restructuring programme does not include a provision on a duty to make
supplementary payments. The total amount of the restructuring debts includes
also approximately 31.9 million euros of conditional restructuring debt, which
consists mainly of counter indemnity given as a guarantee for the guarantee
insurance provided by Atradius Credit Insurance N.V to Kainuu ELY Centre. The
guarantee insurance relates to the certain obligations prescribed in Talvivaara
Sotkamo's environmental permit.
The term of the restructuring programme would consist of one instalment. After
the 1% restructuring debt repayment has been made to the remaining restructuring
creditors and after the other measures obligating the Company in the draft
restructuring programme have been completed, Talvivaara would not be subject to
any restriction on payment of dividends.
The Administrator's estimate is that after the completion of the above
referenced restructuring measures - and assuming that none of the restructuring
creditors would use their conversion right included in the draft restructuring
programme - the balance sheet of the Company would include approximately 25.1
million euros of financial debt, comprising of approximately 12.5 million euros
of new debts arisen during the proceedings and approximately 12.6 million euros
of cut restructuring debts and other liabilities.
The confirmation and entry into force of the draft restructuring programme
requires the fulfilment of all of the following conditions:
a. Talvivaara succeeds in negotiating an agreement with the party that
purchases Talvivaara Sotkamo mining operations from the bankruptcy estate
based on which:
b. Talvivaara can obtain sufficient cash flow to cover the costs of its
business operations if the Company's other assets or other cash flows are
not sufficient to cover said costs; and
c. Talvivaara has the right to make an investment sufficient to acquire a
significant minority stake in the company engaging in the mining operations,
or the parties complete a different financial and/or operative arrangement
that will secure the continuance of the Company's eligible business;
d. The general meeting of shareholders of Talvivaara:
1. approves the opportunity to be offered to all holders of unsecured
restructuring debts to convert the full amount (but not a part thereof) of
their unsecured restructuring debt into shares in the Company with due
regard to any limitations of prohibitions set by foreign securities laws
that would make the offering of the conversion right to certain foreign
creditors either illegal or unreasonably difficult to implement. If all
unsecured restructuring creditors exercise said opportunity, the percentage
of holdings of the Company's current shareholders would be diluted by 70%.
The conversion rate would be EUR 0.1144 per share; and
2. executes or authorises the Company's Board of Directors to execute a
financial arrangement (e.g. issuance of shares or bonds or execution of
other financing instrument) to raise the funds needed to execute an
arrangement referred to in section a) 2. and/or for paying the remaining
restructuring debts and for covering other possible liabilities to the
extent the Company's other funds are not sufficient for such purpose;
a. The proceedings for converting the restructuring debts into shares in the
Company have been completed in accordance with the section b) 1 above, and
the new shares have been registered in the Trade Register.
A share issue or an issuance of another instrument entitling to the shares of
the Company, which are among the possible means to satisfy the condition for the
entry into force of the restructuring programme, would, if fully subscribed for
and depending on the amount to be raised in the transaction, dilute the holdings
of the existing shareholders significantly.
In addition to what has been provided on the lapse of restructuring programme
and corporate reorganization, if the special conditions set for the entry into
force of the restructuring programme have not been met by 13 March 2017, the
Administrator will make a request to the District Court to have the
restructuring proceedings interrupted. In addition, the draft restructuring
programme included a specific condition entitling the Administrator to make a
request to the District Court for the cancellation of the corporate
reorganization in case the Company does not have the funds for paying the
restructuring debts within two years of the confirmation of the programme.
Talvivaara as a debtor in the restructuring proceedings was given a similar
right as the creditors of the corporate reorganisation to give a statement on
the supplemented draft restructuring programme and propose changes to it by the
deadline of 27 March 2015 set by the District Court of Espoo. No statement on
the restructuring programme was given by Talvivaara.
On 14 April 2015, the District Court of Espoo gave a decision to initiate a
creditors' voting procedure on the draft restructuring programme of the Company
in accordance with section 76 of the Restructuring of Enterprises Act. By
initiating the voting procedure, the creditors of the Company are given the
opportunity to either support or oppose the Administrator`s draft restructuring
programme. The approval of the draft restructuring programme requires express
support from the necessary number of creditors.
Based on the decision of the District Court of Espoo, the voting ends on 6 May
2015 at 4.15 pm (Finnish time), except for the voting period for the convertible
bond holders and the nominee-registered bond holders that ends already on 4 May
2015 at 4.00 pm (Finnish time).
Financing and commercial arrangements
Termination of the Zinc Streaming Agreement
On 30 March 2015, the bankruptcy estate of Talvivaara Sotkamo notified Nyrstar
that, pursuant to Chapter 3, Section 8 of the Bankruptcy Act, it does not commit
to the Zinc Streaming Agreement or the Loan and Streaming Holiday Agreement.
Consequently, Nyrstar has on 9 April 2015 sent a notice to the bankruptcy estate
of Talvivaara Sotkamo, contesting the right of the bankruptcy estate to
terminate the Zinc Streaming Agreement or the Loan and Streaming Holiday
Agreement by reason of its own insolvency, and declaring that all the amounts
due by Talvivaara Sotkamo under the Loan and Streaming Holiday Agreement have
become immediately due and payable by Talvivaara Sotkamo. Nyrstar also gave the
bankruptcy estate of Talvivaara Sotkamo a 30-day-notice under the Zinc Streaming
Agreement, during which period Talvivaara Sotkamo as a seller under the Zinc
Streaming Agreement should try to remedy the seller event of default, failing
which the Zinc Streaming Agreement shall terminate. Simultaneously, Nyrstar sent
a notice to the Company, reserving their right to issue a demand to the Company
as a guarantor for a payment of all sums due by Talvivaara Sotkamo under the
Zinc Streaming Agreement and the Loan and Streaming Holiday Agreement, should
the bankruptcy estate of Talvivaara Sotkamo fail to do so.
However, based on the Intercreditor Agreement binding on the Company and
Nyrstar, the Company cannot make any payments to Nyrstar in relation to the
termination sum if full payment has not been made to the lenders having
receivables with a higher ranked priority. As the lenders having a higher ranked
priority will not receive a full payment on their receivables due to Talvivaara
Sotkamo's bankruptcy and the Company's restructuring proceedings, the Company
cannot make payments relating to the termination sum to Nyrstar, as Nyrstar's
claim for termination sum is in a subordinate position. Based on the above, the
Administrator did not include the Company's guarantee liability for the
termination sum in the restructuring debts or in the new liabilities arisen
during the proceedings in his final draft restructuring programme.
On 13 April 2015, the Facility Agent of the lenders under the Revolving Credit
Line Facility Agreement, which have receivables with the highest ranking
priority, notified Nyrstar, the Company and the bankruptcy estate of Talvivaara
Sotkamo that an Event of Default under the Revolving Credit Line Facility
Agreement has occurred and is continuing and that all payments, which would
otherwise be permitted for the Company or Talvivaara Sotkamo have thereby become
prohibited.
Risk factors
Talvivaara's near-term risk factors include particularly such risks that relate
to its ongoing corporate reorganisation proceedings, financing and going concern
status:
If an adequate overall financial solution for the continuance of Talvivaara's
business operations is not found, Talvivaara's restructuring programme may not
be approved and authorised and shareholders could lose their entire investment
in the Company
The approval and authorisation of the proposed restructuring programme of
Talvivaara is conditional, among other things, on (i) a requisite number of the
Company's creditors voting in favour of the Administrator's draft restructuring
programme, (ii) Talvivaara succeeding in completing an arrangement that will
secure the necessary cash flow for the Company to discharge all of its
liabilities and the continuance of the Company's eligible business, and (iii)
the shareholders of Talvivaara approving the possibility for a conversion of
unsecured restructuring debts into shares in the Company as well as the
financial arrangement required to discharge the remaining restructuring debts
and to cover other possible liabilities to the extent the Company's other funds
are not sufficient for such purpose. As of the date of this statement, there is
no certainty as to whether the Company can fulfil all the set requirements
within the given time frame. If the restructuring programme is not approved and
authorised, the Company may have to file for bankruptcy and, as a result, the
shareholders could lose their entire investment in the Company.
If the corporate reorganisation proceedings of Talvivaara are not successful,
shareholders could lose their entire investment in the Company
Although the Board of Directors believes that a corporate reorganisation is a
viable option for Talvivaara, there can be no assurance that the proposed
restructuring programme of the Company will be approved and authorised or be
ultimately successful. The corporate reorganisation process can fail for a
number of reasons, including due to an insufficiency of funds to implement or
complete the restructuring programme, changes in circumstances affecting the
financial viability of Talvivaara, including, for example, termination of the
service and lease agreements between the Company and the bankruptcy estate of
Talvivaara Sotkamo, or insufficient income from the services provided to the
bankruptcy estate or the contemplated new entity running the mining operations.
If the corporate reorganisation fails for these or any other reasons, it could
result in the bankruptcy of the Company. As a result, shareholders could lose
their entire investment in the Company.
Failure by the Company to reach final clarity on the treatment of its guarantee
obligation for the termination sum set forth in the Zinc Streaming Agreement may
impair or even hinder the Company's efforts to raise new funds for the
successful fulfilment of the conditions for the entry into force of the
Company's restructuring programme
Whilst the Company shares the view of the Administrator on the treatment of the
guarantee obligation for the termination sum under the Zinc Streaming Agreement
and considers the view well-founded, there is no certainty that a competent
court or a dispute resolution authority would arrive at the same outcome, should
Nyrstar take legal actions to contest the chosen view. Furthermore, even if such
legal actions were not initiated by Nyrstar, any uncertainty surrounding the
issue would have a significant negative effect on the Company's ability to raise
new funds required for the successful fulfilment of the conditions for the entry
into force of the Company's restructuring programme.
The right of conversion of debt into equity included in the restructuring
programme of Talvivaara and/or the issuance of new equity instruments may lead
to a significant dilution of the existing shareholding of the Company
The right of conversion of debt into equity included in the restructuring
programme of Talvivaara and/or the issuance of new equity instruments may lead
to a significant dilution of the existing shareholding of the Company. The
extent of dilution will eventually be determined by the aggregate amount of the
restructuring debts to be converted into shares at the determined conversion
rate of EUR 0.1144 per share as well as by the subscription price of the newly
issued shares offered and the amount of funds raised in, the potential equity
financing.
In case Talvivaara acquires a stake in the company carrying on the Sotkamo
mining operations, the Sotkamo mine may not be able to successfully address
various operational, environmental and other difficulties facing the Talvivaara
mine and shareholders could ultimately lose their entire investment in the
Company
The Talvivaara mine has faced various difficulties since the commissioning of
the mine in 2008 and 2009. These difficulties include, among others, operational
difficulties concerning the mine's production and performance, environmental
issues as well as legal and administrative proceedings involving the Sotkamo
mine and certain members of Talvivaara's management. Further, there can be no
certainty that the financing potentially available to Talvivaara would be
sufficient to ramp-up production at the Sotkamo mine or that it would ever
achieve profitability. Accordingly, even if Talvivaara were able to obtain
sufficient financing in order to participate in the acquisition of the Sotkamo
mining operations and the restructuring programme for Talvivaara would be
approved and authorized, shareholders could ultimately lose their entire
investment in the Company.
Financial Reporting
Talvivaara received on 11 February 2015 an exemption from the Financial
Supervisory Authority to defer the publication of the financial statements
release as well as the financial statements and the Board of Directors' review
for its financial year ending 31 December 2014 to no later than 30 April 2015.
The exemption was granted on a condition that the Company publishes, by 28
February 2015, information corresponding to the information to be given in an
Interim Management Statement pursuant to chapter 7, section 14 of the Finnish
Securities Market Act, as well as other information available on the prospects
for continuing operations and on the effects of the bankruptcy of Talvivaara
Sotkamo Ltd on the operations of the Company. The Company published the above
referred report on its operational and financial status and development on 27
February 2015.
As announced by the Company on 30 April 2015 Talvivaara's financial statements
for the financial year ended 31 December 2014 were prepared on a basis other
than going concern. The chosen reporting basis resulted from the existence of
material uncertainty that casts significant doubt upon the Company's ability to
realise its assets and discharge its liabilities in the normal course of
business and from the lack of visibility on the Company's operational
environment twelve months beyond the date of reporting.
Legal affairs
Consideration of charges relating to the gypsum pond leakages and discharges
into water ways
Following the consideration of charges, which related to Talvivaara Sotkamo's
gypsum pond leakages and the sodium, sulphate and manganese discharges that
exceeded the anticipated amounts stated in the original environmental permit
application of the mine, the prosecutor decided to bring charges against four
members of Talvivaara's management, including CEO Pekka Perä and former CEO
Harri Natunen. The charges concern aggravated impairment of the environment.
Based on the pre-trial investigation relating to the discharge of raffinate from
the metals recovery plant of Talvivaara Sotkamo and dilute secondary heap
solutions into the open pit during the period of 19 December 2013 - 31 January
2014, the prosecutor decided on 11 February 2015 to bring charges against CEO
Pekka Perä. During the pre-trial investigation, the police moderated the type of
the suspected crime to an environmental infraction (petty crime), while the
prosecutor has changed the type of the suspected crime back to impairment of the
environment in his application for a summons. The prosecutor has requested the
District Court to handle the case together with the case concerning the gypsum
pond leakages and the discharges into water ways.
The Company does not share the prosecutor's view of the threshold for charges
having been met. The Company welcomes, however, the opportunity to have the
facts relating to the above mentioned matters as well as the then-current
operating conditions of the Company discussed in an open court.
Investigation on Talvivaara's disclosure practices
On 28 April 2015, Talvivaara confirmed that a number of current and former
members of Talvivaara's Board of Directors and management have been or will be
heard in connection with an investigation relating to the Company's disclosure
practices. Talvivaara believes that the investigation will establish the
appropriateness of the Company's conduct in all respects, and emphasizes that
the Company has already in the past gone through the applied disclosure
practices extensively and in great detail with the Financial Supervisory
Authority. None of the inquiries has given rise to any administrative sanctions
available for the Financial Supervisory Authority.
Personnel
Talvivaara's headcount decreased from 53 at the beginning of 2015 to 50 on the
day of this announcement.
Talvivaara's personnel comprises an expert organisation, the core competences of
which include, for example, analytical laboratory services, bioheapleaching and
other production processes, procurement, environmental safety, risk management
and communications. The organisation has in the past provided critical services
to Talvivaara Sotkamo and it continues to provide the same services to the
bankruptcy estate of Talvivaara Sotkamo as agreed between the Company and the
bankruptcy estate.
Changes in Talvivaara Management
Talvivaara announced on 30 October 2014 that Saila Miettinen-Lähde, who had been
CFO of the Company since 2005 and Deputy CEO since 2012, had decided to leave
the Company. The employment of Saila Miettinen-Lähde terminated on 31 January
2015.
In preparation of her departure, the Company appointed Chief Commercial Officer
Pekka Erkinheimo as the Deputy CEO with immediate effect. Since 1 February
2015, the finance function has reported to Mr. Erkinheimo.
Market environment
Following the bankruptcy of Talvivaara Sotkamo and its exit from the Talvivaara
Group, the Company has no exposure to nickel and other commodities markets or to
foreign exchange rates. Talvivaara's income is for the time being generated from
the services provided under the service and lease agreements between the Company
and the bankruptcy estate of Talvivaara Sotkamo, as described elsewhere in this
announcement.
Short-term outlook
Talvivaara continues its operations for the time being with the target of
securing sufficient financing to participate, as a member of a consortium, in
the acquisition of the mining operations from the bankruptcy estate of
Talvivaara Sotkamo Ltd or securing a different financial and/or operative
arrangement that will secure the continuance of the Company's eligible business.
Currently, the Company finances its operations by providing administrative and
technical services and by leasing certain critical machinery and equipment to
the bankruptcy estate of Talvivaara Sotkamo Ltd under agreements entered into by
the Company and the bankruptcy estate. However, the operational outlook for
Talvivaara is greatly dependent on the successful completion of the Company's
corporate reorganisation proceedings and the success to closing, timing and
extent of the necessary financing solutions currently under contemplation.
Whilst the Administrator's final draft restructuring programme gives the Company
reasonably ample time fulfil the requirements set forth for the entry into force
of the restructuring programme, there is no certainty that the Company can
fulfil all the requirements within the given timeframe.
Trading in the Talvivaara share at the Helsinki stock exchange has been
suspended since 6 November 2014. As stated by the Finnish Financial Supervisory
Authority in its exemption decision of 24 November 2014 relating to Talvivaara's
January-September 2014 interim report, reliable pricing of the share, which is a
pre-requisite for the trading to resume, cannot occur until the uncertainties
relating to Talvivaara's ability to continue its operations have been solved and
sufficient information on going concern and the Company's financial status has
been announced.
30 April 2015
Talvivaara Mining Company Plc
Board of Directors
Enquiries:
Talvivaara Mining Company Plc Tel. +358 20 712 9800
Pekka Perä, CEO
Pekka Erkinheimo, Deputy CEO
[HUG#1917579]
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