2014-04-30 07:44:30 CEST
2014-04-30 07:45:15 CEST
REGULATED INFORMATION
Talvivaaran Kaivososakeyhtiö Oyj - Annual Financial Report
Talvivaara Mining Company annual results review for the year ended 31 December 2013
Stock Exchange Release
Talvivaara Mining Company Plc
30 April 2014
Talvivaara Mining Company annual results review for the year ended 31 December
2013
Talvivaara's corporate reorganisation proceedings progressing
Encouraging recent developments in nickel market and production
Highlights of Q4 2013
* Nickel production of 1,559t and zinc production of 4,179t
* Production impacted by a four week stoppage at the metals recovery plant in
November-December, due to dilute leach solutions which rendered production
uneconomical
* Bioheapleaching of the new ore heaps progressed in line with best ever heaps
historically,
enabling significant improvement in solution grades following the metals
plant stoppage
* Talvivaara Mining Company Plc ("Talvivaara" or the "Company") and its
operating subsidiary Talvivaara Sotkamo Ltd ("Talvivaara Sotkamo") applied
for corporate reorganisation on 15 November 2013, and the reorganisation
proceedings of the two companies commenced on 29 November 2013 and 17
December 2013, respectively
Highlights of 2013
* Nickel production of 8,662t and zinc production of 17,418t
* Water balance challenges impacted production throughout the year as a
consequence of flooding of the older ore heaps and inactivation of the
bioheapleaching process in them
* Ore production temporarily suspended from September 2012 to mid-May 2013;
record levels of output in mining and materials handling (crushing,
stacking, reclaiming) were achieved after re-start until these functions
were again suspended due to liquidity reasons in November
* EUR 261 million rights-issue completed in April 2013; cash-burn thereafter
higher than anticipated due to the prolonged impact of water on production
and weak nickel prices through most of the year
* Significant commitment on sustainability: environmental investments EUR 34
million and expenditure in water management EUR 36 million
* EUR 593 million impairments on property, plant and equipment and inventory
and EUR 76 million on deferred tax assets reflecting weak nickel market at
the end of 2013, and uncertainties relating to the corporate reorganisation
proceedings and the Company's liquidity situation
* The impairments have no cash impact and are in line with common mining
sector practice during the low cycles of commodities markets such as those
seen in 2013
* Operating loss before the write-downs EUR 108 million; reported operating
loss EUR 702 million
Highlights of 2014 to date
* Q1 2014 nickel production of 3,068t and zinc production of 5,726t; best
quarter since Q3 2012
* Year-to-date nickel production through 28 April 4,203t of nickel and 8,032t
of zinc; stable production through the first four months of the year
* New heaps leaching well and providing most of the produced metals for the
time being with nickel grades in solution at around 1.3-1.5g/l
* Ore production remains suspended until further financing is secured
* Loan and streaming holiday agreement with Nyrstar for an up to EUR 20
million loan facility and option to sell up to 80,000t of zinc to Nyrstar at
market price for an additional significant financing impact
* Reports on the financial status of Talvivaara Mining Company and Talvivaara
Sotkamo by the Administrator completed and conclude that executable
restructuring programmes can be set up for both companies subject to
financing solutions being achieved
Guidance for 2014
Talvivaara's operational outlook in 2014 remains subject to the success to
completion, timing and extent of the financing transactions that are currently
being negotiated. In the absence of a comprehensive financing solution and
related operational plan for the time being, Talvivaara is not in a position to
give guidance on its production or its operational and capital expenditure for
the current year.
Key figures
-------------------------------------------+---------+--------+--------+-------
EUR million | Q4| Q4| FY| FY
| 2013| 2012| 2013| 2012
-------------------------------------------+---------+--------+--------+-------
Net sales | 12.6| 25.7| 77.6| 142.9
-------------------------------------------+---------+--------+--------+-------
Operating loss before impairments | -| -| (108.8)| -
-------------------------------------------+---------+--------+--------+-------
Operating loss | (628.7)| (57.0)| (701.8)| (83.6)
-------------------------------------------+---------+--------+--------+-------
% of net sales |(4988.7)%|(221.9%)|(904.7)%|(58.5)%
-------------------------------------------+---------+--------+--------+-------
Loss for the period | (731.8)| (59.4)| (812.5)|(103.9)
-------------------------------------------+---------+--------+--------+-------
Earnings per share, EUR | (0.43)| (0.22)| (0.48)| (0.38)
-------------------------------------------+---------+--------+--------+-------
Equity-to-assets ratio | (46.1)%| 24.3%| (46.1)%| 24.3%
-------------------------------------------+---------+--------+--------+-------
Net interest bearing debt | 548.7| 563.8| 548.7| 563.8
-------------------------------------------+---------+--------+--------+-------
Debt-to-equity ratio | (190.9)%| 183.8%|(190.9)%| 183.3%
-------------------------------------------+---------+--------+--------+-------
Capital expenditure | 7.4| 29.6| 60.5| 97.5
-------------------------------------------+---------+--------+--------+-------
Cash and cash equivalents at the end of | 5.9| 36.1| 5.9| 36.1
the period | | | |
-------------------------------------------+---------+--------+--------+-------
Number of employees at the end of the | 549| 588| 549| 588
period | | | |
-------------------------------------------+---------+--------+--------+-------
All reported FY 2013 figures in this release are audited; quarterly figures are
unaudited.
CEO Pekka Perä comments: "The recent developments since our last operational
update at the end of February have been encouraging: the sentiment in the nickel
market has turned for the positive with prices improving from around USD
14,000/t then to above USD 18,000/t currently, we have completed the first stage
of our targeted financing solutions through the loan and streaming holiday
agreement with Nyrstar, and our production activities in Sotkamo have continued
well with the Q1 2014 nickel production of 3,068t being the best quarterly
output since Q3 2012.
Whilst the early part of 2014 has been promising, the difficulties of 2013
nevertheless left us in a challenging situation. Talvivaara and its operating
subsidiary Talvivaara Sotkamo Ltd applied for corporate reorganization in
November 2013, and financing solutions for the Group are now being sought in
order to secure Talvivaara's ability to continue its production ramp-up and
become a viable business in the long term. The uncertainties relating to the
corporate reorganization and our financing solutions going forward as well as
the weak nickel market prevailing at the end of 2013 are also reflected in our
financial results, where we made EUR 593 million write-downs on property, plant
and equipment and inventories and an EUR 76 million impairment on deferred tax
assets. Such write-downs have recently been rather common-place in the mining
industry due to the difficult market situation and are hence not unique to
Talvivaara, but they have nevertheless a profound impact on the Company's
results and balance sheet.
Operationally Talvivaara suffered throughout 2013 from the prolonged inhibiting
effects of water on the bioleaching process. This left the older heaps largely
inactive and as a result, our nickel production for the year only amounted to
8,662t. Further, we were only able to mine new ore for six months, from mid-May
to November, as the open pit contained excess water during the first months of
the year, whilst our liquidity problems forced us to again suspend mining closer
to the year-end. Despite this, the operational outlook grew increasingly
positive going into 2014, as our new ore heaps, primary heaps 1 and 4,
demonstrated very good leaching performance and started contributing to our
metals production in the fourth quarter. The nickel grade in solution pumped to
the metals plant rose from less than 0.8g/l in November to around 1.5g/l by
February and has stayed around that level ever since despite high levels of
metals out-take from the two new heaps. Once again, this demonstrates that the
bioleaching technology works.
Much of the public discussion around Talvivaara has revolved around
environmental matters, but similarly a great proportion of the Company's efforts
and expenditure have gone to water management and mitigation of environmental
risks. In 2013, Talvivaara treated and discharged some 5.7 million cubic meters
of water from the mine area, commissioned reverse osmosis water treatmentplants, and built additional dams and ponds to reduce the catchment area and to
increase storage volumes. The Company's environmental investments in 2013
amounted to EUR 34 million, up 6 per cent from EUR 32 million the year before,
and the operational environmental expenditure totalled EUR 36 million. Although
we feel that we have already dedicated as much resources to environmental
matters as has been reasonably possible, we also acknowledge that the work is
not over, but rather will continue this year and beyond with our stated target
of being a leader in sustainable mining.
Having been depressed for most of 2013 due to over-supply and weak demand, the
nickel market has shown a remarkable recovery in 2014 with nickel price
improving by around 30 per cent from the levels seen in the beginning of the
year. The main stimulus for the improvement has been the Indonesian ban on
nickel ore exports, which came into effect in January and which has had a
particularly strong impact on the nickel ore supply to China. The market outlook
is now more positive than in the last few years with the nickel over-supply
being foreseen to turn into a deficit possibly as early as this year.
For our long term future, our most important target in the near term is to
secure sufficient funds to allow us to re-start our re-claiming and mining
operations. Having these two functions operational helps us in our water
management operations and creates the foundation on which we can again continue
ramping up our production in anticipation of volume based cost benefits. We
believe our good results in bioheapleaching over the last several months as well
as the recent improvement in the nickel market are helpful in our financing
efforts and hope to be able to announce some positive news in this respect
during the next few months.
Now that our corporate reorganization proceedings and re-financing efforts are
ongoing, we have had to lay off part of our personnel for the time being, and
all our employees have had to endure uncertainty over the future of their jobs
and Talvivaara's operations. Whilst I strongly believe in the long term
viability of the Talvivaara mine, I am also sincerely grateful for our
personnel's commitment through these challenging times and look forward to
seeing their efforts carry the operation into a stable and profitable future."
Enquiries:
Talvivaara Mining Company Plc Tel. +358 20 712 9800
Pekka Perä, CEO
Saila Miettinen-Lähde, Deputy CEO and CFO
English language presentation and live webcast on 30 April 2014 at 09:00 UK /
11:00 Finnish time
An English language combined presentation, conference call and live webcast on
the annual results will be held on 30 April 2013 at 09:00 UK / 11:00 Finnish
time at Scandic Hotel Simonkenttä, Helsinki, Finland.
The webcast can be accessed through the following link:
http://qsb.webcast.fi/t/talvivaara/talvivaara_2014_0430_q4/
A conference call facility is available for participants joining via telephone
and there will be a Q&A following the presentation.
Participant - UK: +44 (0)20 7162 0077
Participant - Finland:+358 (0)9 2313 9201
Participant - US: +1 334 323 6201
Conference ID: 944299
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.
Talvivaara's fourth quarter review
New heaps leaching well, metals production re-started after a four-week shut-
down
Nickel and zinc production in Q4 2013 amounted to 1,559t and 4,179t,
respectively. Production was limited due to the low leach performance from the
two old heaps (primary heaps 2 and 3) while two new heaps (primary heaps 1 and
4) were being brought into operation, but not yet at their peak performance.
Heap 4 started positively contributing to nickel production at the end of
October and heap 1 reached positive contribution at the beginning of December.
Both heaps showed good ramp up, with performance in line with best ever leaching
results.
The production output was also impacted by an approximately four-week shut down
of the metals plant in November-December. The stoppage was taken to address the
nickel grade in the leach solution, which had depleted to levels which made
operation of the metals recovery plant uneconomical. The shut-down allowed the
leach solution grade to increase as the two new heaps increased in grade, and by
the time the plant restarted, nickel grade in solution had increased from
0.7g/l to 1.3g/l. The nickel grade in solution pumped to the metals plant
continued to rise thereafter despite high production rates from the new heaps.
Significant effort was made during the period to improve the leaching
performance of heaps 2 and 3. These heaps have struggled to operate since 2012
when heavy rains resulted in the heaps flooding and the leach reaction
practically stopping. Acid addition to the heaps was increased to help modify pH
and return the heaps to better leach conditions. Modifications to the surface of
the heaps were also made and aeration pipes re-opened to improve solution
percolation and aeration. Some of these actions showed promising short term
results but the improvements were not sufficient to justify continued additional
costs of the actions taken.
Due to the financial situation of the Company, all mining and materials handling
operations were suspended from 13 November 2013. Prior to the suspension, mining
and materials handling operated well during the quarter, with new records being
achieved for mined tonnes, and tonnes crushed. Just prior to the suspension,
significant improvements had also been made in reclaiming allowing major
bottlenecks in the process to be identified and removed.
Production key figures
---------------------+------+-----+-----+------+------
| | Q4| Q4| FY| FY
| | 2013| 2012| 2013| 2012
---------------------+------+-----+-----+------+------
Mining | | | | |
---------------------+------+-----+-----+------+------
Ore production |Mt | 1.6| -| 7.4| 8.7
---------------------+------+-----+-----+------+------
Waste production |Mt | 0.9| 1.2| 3.1| 5.3
---------------------+------+-----+-----+------+------
Materials handling | | | | |
---------------------+------+-----+-----+------+------
Stacked ore |Mt | 1.7| -| 7.6| 8.7
---------------------+------+-----+-----+------+------
Bioheapleaching | | | | |
---------------------+------+-----+-----+------+------
Ore under leaching |Mt | 51.8| 44.3| 51.8| 44.3
---------------------+------+-----+-----+------+------
Metals recovery | | | | |
---------------------+------+-----+-----+------+------
Nickel metal content|Tonnes|1,559|2,317| 8,662|12,916
---------------------+------+-----+-----+------+------
Zinc metal content |Tonnes|4,179|4,106|17,418|25,867
---------------------+------+-----+-----+------+------
Financial performance in the fourth quarter of 2013
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 2013
amounted to EUR 12.6 million (Q4 2012: EUR 25.7 million). Compared to Q3 2013
net sales decreased by 48 per cent primarily due to lower production volumes as
a result of the four-week shut-down of the metals plant taken because of the
depressed metal grades in leach solution. The nickel price also remained weak
throughout the quarter, however approximately at the same level as in the
previous quarter. Product deliveries in Q4 2013 amounted to 1,577t of nickel,
43t of cobalt and 2,363t of zinc.
Changes in inventories of finished goods and work in progress amounted to EUR
12.3 million (Q4 2012: EUR (6.4) million). The changes in inventories reflect
the level of mining and materials handling operations during the relevant
period; in Q4 2013 ore production operations were ongoing until 13 November,
whereas the year before they were suspended due to the water balance issues for
the whole quarter.
In Q4 2013, the decision was taken to no longer actively leach the oldest parts
of the secondary heaps and to disconnect them from the leach solution
circulation in the near future. Accordingly, it was concluded that the remaining
metals in these heap sections would no longer be recoverable and that the
estimated cost of completion relative to the metal contents and anticipated
recoveries in the actively leached heap sections would therefore increase. In
view of the anticipated metal prices in the foreseeable future, it was further
concluded that the net realizable value of the actively leached inventory was
less than its estimated cost of completion. As a result, the Company recognised
a write-down of EUR 93.7 million for the work in progress inventory. As at 31
December 2013 the carrying amount of work in progress inventory after the write-
down was EUR 234 million, reflecting its net realisable value.
The operating loss for Q4 2013 was EUR (628.7) million (Q4 2012: EUR (57.0)
million), corresponding to an operating margin of (4,988.7)% (Q4 2012:
(221.9)%). The decline in the nickel market price, challenges related to the
production and water management, the Company's weakened liquidity position and
the filing for corporate reorganisation by the Company and Talvivaara Sotkamo on
15 November 2013 were identified as impairment indicators by management and,
following an impairment test performed for Talvivaara's mining assets in
Sotkamo, an impairment charge of EUR 499 million was made at the year-end 2013,
which is reflected in the operating loss. Key assumptions and sensitivity
analysis for the impairment analysis are provided under Note 9 of the Company's
Financial Statements for 2013.
During Q4 2013, materials and services amounted to EUR (21.5) million (Q4 2012:
EUR (20.0) million) and other operating expenses to EUR (18.7) million (Q4
2012: EUR (33.4) million). Materials and services were approximately at the same
level, but other operating expenses substantially lower than the year before
with the Q4 2012 figures reflecting the additional costs incurred as a result of
the gypsum pond leakage. In Q4 2012 Talvivaara 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 was recognised for the necessary water
storage and pumping arrangements and waste water neutralization measures to
secure a sustainable water balance at the mine site. The majority of the costs
were incurred in 2013 and at 31 December 2013 the remaining provisions were EUR
3.8 million and EUR 2.5 million, respectively.
Reflecting the write-downs, loss for the period amounted to EUR (731.8) million
(Q4 2012: EUR (59.4) million).
Balance sheet and financing
Capital expenditure during the last quarter of 2013 totalled EUR 7.4 million (Q4
2012: EUR 29.6 million). All capital expenditure during Q4 2013 was minimized to
the extent possible due to the Company's tight liquidity situation. In practice,
only investments relating to water management and environmental safety were
carried out as planned along with those that were necessary for the continuation
of metals production.
Talvivaara has continued to recognise deferred tax assets on its consolidated
balance sheet through Q3 2013 and the amount of deferred tax assets recognized
on tax loss carryforwards as at 30 September 2013 amounted to EUR 136.5 million
(31 December 2012: EUR 103.8 million). In its Q3 2013 interim results, the
Company announced having reviewed the past operational challenges which have led
to lower than expected production and profitability levels at the Talvivaara
mine. It was further noted that if Talvivaara generates future taxable profits
lower than those assumed by the Company in determining the amounts of the
recognized deferred tax assets, the assets may become impaired, either in part
or in full. Accordingly, the amounts recognized on the balance sheet could be
reversed through profit and loss.
Having undertaken a review of the amount of deferred tax assets recognized on
tax loss carryforwards, the Company has, due to the historical losses of the
mine project, the experienced delays in the ramp-up process and the current
financial situation of the Company, de-recognized deferred tax assets in the
amount of EUR 75.5 million, leaving the Company with a zero net deferred tax
position.
Despite the de-recognition of the deferred tax assets, subject to Talvivaara
obtaining sufficient financing to continue the ramp-up of its operations, the
Group may be able generate sufficient taxable profits so that all of the
deferred tax assets could be utilized in the future.
On 31 December 2013, cash and cash equivalents totalled EUR 5.9 million (31
December 2012: EUR 36.1 million).
Total equity and liabilities as at 31 December 2013 amounted to EUR 623.3
million (31 December 2012: EUR 1,260.8 million), reflecting the impairments
recognized in property, plant and equipment and inventories and the write-down
in deferred tax assets.
Base metal prices remained weak during the last quarter of 2013
In Q4 2013 the nickel price remained at around or below USD 14,000/t, where it
had traded since June. The market suffered from over capacity and weak demand
and the London Metal Exchange nickel stocks were reaching their all-time high
levels of 262,000t at year-end.
Corporate reorganisation
Owing to weak nickel price development and the prolonged effects of excess water
on production levels, Talvivaara's liquidity position weakened more than
anticipated during 2013. As a result, the Company and its operating subsidiary
Talvivaara Sotkamo applied for corporate reorganisation on 15 November 2013, and
corporate reorganisation proceedings of these companies commenced on 29 November
2013 and 17 December 2013, respectively.
Talvivaara's annual results review 2013
Nickel market remained weak for most of 2013
In 2013, the nickel market was impacted by oversupply and relatively weak
demand. Having traded at around USD 17,000-18,000/t for the first two months of
the year, the nickel price declined down to below USD 14,000/t in June and
stayed around the same level for the remainder of the year, averaging at USD
14,000/t for the second half of the year.
Whilst nickel demand in China continued to play a significant part in the nickel
market and nickel price development throughout the year, a particularly
important role was played by the Indonesian nickel containing ore used for
nickel pig iron ("NPI") production primarily in China. The Indonesian ore
production has grown steadily over the recent years and was estimated at some
460,000 tonnes in 2013, measured by nickel content, which represents
approximately 24 per cent of the global nickel supply. The majority of the NPI
is used for the production of stainless steel in China, and over the last few
years, the marginal cost of nickel production from the NPI has fallen
substantially as a result of technical development. This has made NPI a cost-
efficient source of nickel for China and in part contributed to the weak nickel
price development during the past year. However, on 12 January 2014, the
Indonesian government implemented a ban on unprocessed nickel ore exports, which
has since had a substantial impact on nickel supply, the average marginal cost
of nickel production and nickel price. Since the beginning of 2014, nickel price
has increased by approximately 30 per cent, from around USD 14,000/t to above
USD 18,000/t, which has been a substantially stronger and quicker improvement
than anticipated still in January.
Global primary nickel consumption grew slightly during 2013, and the Chinese
consumption at approximately 850,000 tonnes represented approximately 45 per
cent of the global market. On the supply side, global primary nickel supply
amounted to 1.91 million tonnes in 2013, leaving the market at a surplus of
approximately 100,000 tonnes. (Source: Reuters,INSG)
The EUR/USD exchange rate showed an increasing trend towards the end of the year
having traded at around 1.30 during the spring and moving up to around 1.37 by
the end of the year. Whilst the strengthening of the Euro reflected on one hand
the subsiding of the Eurozone crisis, it exacerbated on the other hand the
impact of the weak US dollar based nickel price on Euro cost based producers
such as Talvivaara.
Production continued to suffer from prolonged effects of excess water
Talvivaara closed the year having produced 8,662t of nickel (2012: 12,916t) and
17,418t of zinc (2012: 25,867t). Over the course of 2013, Talvivaara's
operations continued to be impacted by water balance issues stemming from the
heavy rains of 2012 and the gypsum pond leaks of November 2012 and April 2013;
hence one of the key areas of activity was to establish measures to purify and
release excess waters captured at the mine area. Ore production re-commenced in
mid-May 2013 after having been suspended from September 2012 due to excess water
in the open pit. After successful operation from May to November, ore production
was again suspended, this time for financial reasons. Metal grades in the
bioleaching solutions suffered from the prolonged effects of water on the old
heaps and decreased through most of the year until the newly stacked ore started
to contribute to production in the fourth quarter. Metals recovery plant
operation and availability improved steadily through the year without any
extended stoppages relating to unexpected equipment failures.
Mining and materials handling produced 7.4Mt and processed 7.6Mt of ore (2012:
8.7Mt), and mined 3.1Mt of waste (2012: 5.3Mt) in 2013 during the six months
from May to November that these functions were operational. A record production
level of 1.66Mt per month was achieved in October before the operation was
suspended. The amount of nickel in the ore stacked to leaching in October was
4,064t. The step change seen in the productivity, quality and capacity of mining
and materials handling was achieved through stricter grade control, increased
cut-off grade, enhancement of the agglomerate quality control, focus on unit
costs, and de-bottlenecking of the reclaiming operation.
In bioheapleaching the average nickel grade through the year was 1.0g/l.
Special attention was paid to various operational measures to enhance the
performance of the existing heaps and to ensure outstanding start-up of the new
heaps. Significant improvement compared to the previous year was achieved with
the new heaps, whereas the actions to improve the operation of the old heaps 2
and 3 proved not to be cost efficient enough. The well performing new heaps,
which cover approximately 40 per cent of the total primary leaching area,
together with the secondary leaching, enabled the realized increase in metals
production at the year end and going into 2014.
In metals recovery, plant stability and availability continued to improve
compared to previous years. De-bottlenecking actions were successfully executed
allowing leach solution flow rate to increase up to 1,750m3/h. The average feed
flow rate for the entire year was 1,142 m3/h. Unexpected process or equipment
related downtime was approximately one week through the entire year, proving
that the processing technology has matured to a steady industrial stage.
The challenging water balance situation continued throughout the year 2013.
Additional storage and purification capacity was built for stored contaminated
waters and reverse osmosis units were commissioned mid-2013 for purifying
circulated water for usage at the metals recovery plant.
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 2013 amounted to EUR 77.6 million (2012:
EUR 142.9 million). Net sales decreased by 46 per cent compared to 2012 due to
smaller delivery volumes as well as lower nickel price. Production was impacted
by the challenging water situation at the mine throughout the year, particularly
as regards the effect of water on the older ore heaps. Product deliveries
amounted to 8,725t of nickel, 13,722t of zinc and 286t of cobalt (2012: 12,641t
of nickel, 29,256t of zinc, 355t of cobalt).
The Group's other operating income amounted to EUR 1.9 million (2012: EUR 4.1
million) and mainly consisted of indemnities on losses.
Changes in inventories of finished goods and work in progress amounted to EUR
53.7 million (2012: EUR 50.3 million). The increase in inventories primarily
reflects the costs associated with mining and materials handling relating to
work in progress.
In Q4 2013, the decision was taken to no longer actively leach the oldest parts
of the secondary heaps and to disconnect them from the leach solution
circulation in the near future. Accordingly, it was concluded that the remaining
metals in these heap sections would no longer be recoverable and that the
estimated cost of completion relative to the metal contents and anticipated
recoveries in the actively leached heap sections would therefore increase. In
view of the anticipated metal prices in the foreseeable future, it was further
concluded that the net realizable value of the actively leached inventory was
less than its estimated cost of completion. As a result, the Company recognised
a write-down of EUR 93.7 million for the work in progress inventory. As at 31
December 2013 the carrying amount of work in progress inventory after the write-
down was EUR 234 million, reflecting its net realisable value.
Materials and services were EUR (95.6) million in 2013 (2012: EUR (117.8)
million) and other operating expenses were EUR (62.2) million (2012: EUR (81.2)
million). The largest cost items were production chemicals, external services,
electricity, maintenance and costs related to water management. In Q4 2012
Talvivaara also recognised EUR 12.2 million in provisions for costs related to
the gypsum pond leakage of November 2012, 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 was recognised for the necessary water storage
and pumping arrangements and waste water neutralization measures to secure a
sustainable water balance at the mine site. The majority of the costs were
incurred in 2013 and at 31 December 2013 the remaining provisions were EUR 3.8
million and EUR 2.5 million, respectively.
Personnel expenses were EUR (30.9) million (2012: EUR (28.1) million).
The operating loss for 2013 was EUR (701.8) million (2012: EUR (83.6) million),
corresponding to an operating margin of (904.7)% (2012: (58.5)%). The decline in
the nickel market price, challenges related to the production and water
management, the Company's weakened liquidity position and the filing for
corporate reorganisation by the Company and Talvivaara Sotkamo on 15 November
2013 were identified as impairment indicators by management and, following an
impairment test performed for Talvivaara's mining assets in Sotkamo, an
impairment charge of EUR 499 million was made at year-end 2013, which is
reflected in the operating loss.
Finance income for 2013 was EUR 0.9 million (2012: EUR 0.8 million) and
consisted mainly of exchange rate gains and interests on deposits. Finance costs
of EUR (57.1) million (2012: EUR (46.5) million) mainly resulted from interest
and related financing expenses on borrowings.
The loss for 2013 amounted to EUR (812.5) million (2012: EUR (103.9) million)
reflecting the write-downs on inventory and property, plant and equipment. Other
factors included the challenging nickel price, elevated costs due to the water
balance challenges and low level of product deliveries. Earnings per share was
EUR (0.48) (2012: EUR (0.35).
The total comprehensive income for 2013 was EUR (812.5) million (2012: EUR
(103.9) million).
Balance sheet
Assets
Capital expenditure in 2013 totalled EUR 60.5 million (2012: EUR 97.5 million).
The expenditure related primarily to the uranium extraction circuit, earthworks
on secondary heap foundations and water management comprising dam and pond
structures, pumping and piping arrangements and water treatment facilities. On
the consolidated statement of financial position as at 31 December 2013,
property, plant and equipment totalled EUR 305.0 million (31 December 2012: EUR
809.5 million) after an impairment charge of EUR 499 million.
In the Group's assets, inventories amounted to EUR 261.5 million on 31 December
2013 (31 December 2012: EUR 297.8 million). The year-end inventories reflect
both an increase of EUR 53.7 million in work in progress and an impairment
charge of EUR 93.7 million.
Trade receivables amounted to EUR 10.4 million on 31 December 2013 (31 December
2012: EUR 32.2 million). The trade receivables decreased due to the four-week
suspension of metals production in November-December as well as the low nickel
price in late 2013.
Talvivaara has continued to recognise deferred tax assets on its consolidated
balance sheet through Q3 2013 and the amount of deferred tax assets recognized
on tax loss carryforwards as at 30 September 2013 amounted to EUR 136.5 million
(31 December 2012: EUR 103.8 million). In its Q3 2013 interim results, the
Company announced having reviewed the past operational challenges which have led
to lower than expected production and profitability levels at the Talvivaara
mine. It was further noted that if Talvivaara generates future taxable profits
lower than those assumed by the Company in determining the amounts of the
recognized deferred tax assets, the assets may become impaired, either in part
or in full. Accordingly, the amounts recognized on the balance sheet could be
reversed through profit and loss.
Having undertaken a review of the amount of deferred tax assets recognized on
tax loss carryforwards, the Company has, due to the historical losses of the
mine project, the experienced delays in the ramp-up process and the current
financial situation of the Company, de-recognized deferred tax assets in the
amount of EUR 75.5 million, leaving the Company with a zero net deferred tax
position.
Despite the de-recognition of the deferred tax assets, subject to Talvivaara
obtaining sufficient financing to continue the ramp-up of its operations, the
Group may be able generate sufficient taxable profits so that all of the
deferred tax assets could be utilized in the future.
On 31 December 2013, cash and cash equivalents totalled EUR 5.9 million (31
December 2012: EUR 36.1 million).
Equity and liabilities
In equity and liabilities, total equity amounted to EUR 287.5 million on 31
December 2013 (31 December 2012: EUR 306.8 million). Talvivaara raised EUR
250.8 million, net of transaction costs, from an issue of 1,633,857,840 new
shares in April 2013. No new shares were subscribed for during 2013 under the
company's stock option rights 2007 or 2011 schemes.
As at 31 December 2013 borrowings amounted to EUR 554.6 million on (31 December
2012: EUR 599.8 million). The changes in total borrowings during the year mainly
resulted from the repayment in May of EUR 76.9 million senior unsecure
convertible bonds due 2013.
The Company and Talvivaara Sotkamo's application for corporate reorganisation on
15 November 2013 constituted an event of default under the companies' financing
facilities with the exception of financial leases. Therefore, the majority of
the borrowings, EUR 524.0 million, have as at 31 December 2013 been reclassified
as current borrowings and any unamortized costs have been expensed to the income
statement accreting the loans carrying amount to the redemption value. Despite
this, such debts cannot be repaid until the repayment terms, including payment
schedule and amount, have been decided and authorized as part of the Company and
Talvivaara Sotkamo's respective reorganisation programmes.
Of the total borrowings, approximately EUR 517 million constitute reorganisation
debts that may be restructured as part of the corporate reorganisation
programme. All amounts of reorganisation debts remain subject to change and may
only be finalized as the eventual reorganisation programmes are authorised. As
at the date of the Company's consolidated financial statements on 30 April
2014, the reorganisation programmes have not yet been proposed nor authorised.
Total advance payments as at 31 December 2013 amounted to EUR 286.1 million,
representing an increase of EUR 12.4 million from EUR 273.7 million on 31
December 2012. During 2013, Talvivaara received a EUR 12.0 million additional
pre-payment from Nyrstar based on an amendment to the zinc streaming agreement
entered into in February, and a USD 10 million additional advance payment from
Cameco, similarly agreed and received in February. The original advance payment
from Nyrstar was amortised by EUR 2.7 million as a result of zinc deliveries.
Total equity and liabilities as at 31 December 2013 amounted to EUR 623.3
million (31 December 2012: EUR 1,260.8 million), reflecting the impairments
recognized in property, plant and equipment and inventories and the write-down
in deferred tax assets.
Financing
On 12 February 2013 Talvivaara Sotkamo entered into an amendment agreement with
Cameco Corporation 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. In addition, the duration of the agreement was
extended to 31 December 2017 and commercial terms revised accordingly.
Talvivaara received the additional up-front investment in February 2013.
On 14 February 2013 Talvivaara Sotkamo entered into an amendment agreement with
Nyrstar regarding the zinc in concentrate streaming agreement pursuant to which
Nyrstar made an additional 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 up-front payment was received in February
2013. As at 31 December, 13,744 tonnes of zinc had been delivered towards the
38,000 tonnes commitment agreed in the amendment agreement.
On 8 March 2013 an Extraordinary General Meeting of Talvivaara Mining Company
resolved to approve the proposal by the Board of Directors to authorise the
Board of Directors to undertake a share issue for consideration pursuant to the
shareholders' pre-emptive subscription right. The share issue was finalised in
April and all 1,633,857,840 new shares offered in the rights issue were
subscribed for. The gross proceeds amounted to approximately EUR 261 million.
Total number of shares in Talvivaara Mining Company increased to 1,906,167,480
shares.
On 20 May 2013, Talvivaara completed the repayment of its Senior Unsecured
Convertible Bonds due in 2013. The remaining convertible bonds amounted to EUR
76.9 million and the repayment was made according to the terms.
Corporate reorganisation
The Company and Talvivaara Sotkamo applied for corporate reorganisation on 15
November 2013 by filing related applications with the District Court of Espoo,
Finland ("District Court of Espoo"). The District Court of Espoo took the
decision to commence a corporate reorganisation process in respect of the
Company on 29 November 2013 and in respect of Talvivaara Sotkamo on 17 December
2013. The District Court of Espoo appointed Mr. Pekka Jaatinen, Attorney-at-Law,
from Castrèn & Snellman Attorneys to act as the Administrator in respect of the
corporate reorganisation of both the Company and Talvivaara Sotkamo.
In reorganisation proceedings governed by the Finnish Corporate Reorganisation
Act (47/1993, as amended) (the "Reorganisation Act"), both the business
operations and the debts of a company may be reorganised and restructured. As a
result of such reorganisation, a company can either continue its operations or,
if the reorganisation fails, initiate bankruptcy proceedings.
The central task of the Administrator is to draw up a proposal for a
reorganisation plan in collaboration with the various parties within a time
limit set by the District Court of Espoo. An important part of the
reorganisation plan is the payment arrangements for debts. In the reorganisation
plan, debts may be restructured in any of the following ways: (i) through
changing the payment schedule; (ii) applying payments made by the debtor first
in amortisation of the principal amount of the debt and only thereafter as
payments of other debt related costs, such as interest; (iii) reducing debt
related costs, including the interest rate; and (iv) reducing the amount of the
unpaid debt. The commencement of a reorganisation process does not result in
all the debts of the relevant debtor becoming due and payable. Any debts that
are not considered restructuring debts are to be repaid in accordance with their
original terms.
The District Court of Espoo has issued rulings in respect of certain deadlines
in connection with the Company and Talvivaara Sotkamo's respective corporate
reorganisations. According to the Court's ruling, the Administrator's reports on
the financial status of both companies were completed on 14 April 2014,
declaring that in the Administrator's view, an executable reorganisation
programme can be set up for both companies, provided that financing solutions
for an interim period and for the longer term are achieved. Proposals for both
companies' respective reorganisation plans are due to be submitted by the
Administrator by 28 May 2014. Furthermore, in connection with both corporate
reorganisations, the District Court of Espoo has appointed creditor committees,
which act as the joint representatives of the creditors in the reorganisation
proceedings. Various creditor groups, including secured creditors, other debt
financiers, as well as business partners and subcontractors essential for the
operations of both companies, are represented in the creditor committees
appointed by the Court. The creditor committees of the Company and Talvivaara
Sotkamo each have the same composition.
As at the date of the Company's financial statements on 29 April 2014, the
reorganisation plans of the Company and Talvivaara Sotkamo have not been
submitted to, nor authorised by the District Court of Espoo and as such, the
Company's Board of Directors is not aware of the contents of the proposals for
the reorganisation plans that will be made by the Administrator. The Directors
expect that the restructuring debts of the Company and Talvivaara Sotkamo will
be considerably reduced as part of the reorganisation plan. Before proposing the
reorganisation plans, the Administrator will discuss and negotiate with the
Company and Talvivaara Sotkamo as well as their creditors. In determining
whether to support or not to support any proposal for a reorganisation plan, the
Boards of Directors of both companies also need to take into account other
alternatives, if any, available to the Company and Talvivaara Sotkamo. The
failure of the reorganisation process could result in the bankruptcy of the
Company and/or Talvivaara Sotkamo.
In bankruptcy proceedings the Company and Talvivaara Sotkamo, with their assets
and liabilities, would be replaced by their respective bankruptcy estates, whose
decisions would thereafter be controlled by the creditors.
Going concern
Talvivaara's financial statements for the financial year ended 31 December 2013
have been prepared on a going concern basis, which assumes that the Company will
be able to realise its assets and discharge its liabilities in the normal course
of business for the foreseeable future.
The Company is working together with the Administrator towards finding
appropriate financing solutions for the Group going forward. On 1 April 2014,
Talvivaara entered into a loan and streaming holiday agreement with Nyrstar
Sales and Marketing AG ("Nyrstar") for a loan facility of up to EUR 20 million
and an arrangement whereby, subject to Talvivaara securing a long-term financial
solution, the Group also has an option to enter into a streaming holiday for
delivery volumes of up to 80,000 tonnes of zinc in concentrate. During the
streaming holiday, Nyrstar commits, outside the framework of the original
contract between the parties, to purchase zinc concentrate from Talvivaara at
market terms for an additional, significant financing impact.
The agreement with Nyrstar provided Talvivaara with sufficient liquidity to
continue the corporate reorganisation and its operations in the short term. To
secure the Group's long term viability, Talvivaara also explores the options of
identifying potential investor(s) to participate in a medium term bridge
financing and a long-term, overall financial solution for the Group.
As of the date of the authorisation of the financial statements by the Board of
Directors, the Directors, Management and the Administrator do not contemplate
the liquidation of the Company or Talvivaara Sotkamo. As such, Directors and
Management believe that the going concern basis of presentation is appropriate
regardless of the on-going financing discussions and commencement of the
reorganisation proceedings. However, the Company's liquidity situation continues
to cause material uncertainty that casts significant doubt upon the Company and
Talvivaara Sotkamo's ability to continue as a going concern and that, therefore,
the Group may be unable to realise its assets and discharge its liabilities in
the normal course of business. Should the going concern basis prove
inappropriate in the foreseeable future, adjustments to the carrying amounts
and/or classifications of Talvivaara's assets and liabilities would be
necessary.
The Group's ability to continue as a going concern is dependent on the
successful completion of the contemplated financing transactions as well as the
development and authorisation of executable restructuring programmes for both
the Company and Talvivaara Sotkamo. Furthermore, Talvivaara's future
profitability is dependent on the prevailing market conditions and the Group's
ability to successfully implement its business plan at the Talvivaara mine. At
the time of the Company's FY 2013 financial statements on 29 April 2014, it is
not possible to foresee whether Talvivaara will be able to execute its
financing, reorganisation and operational plans or whether the execution of
these will improve the Group's financial condition sufficiently to allow it to
continue as a going concern.
The corporate reorganisation plans to be authorised by the District Court of
Espoo could materially change the carrying amounts and classifications reported
in the Group's financial statements. The assets and liabilities in the Company's
FY 2013 financial statements do not reflect any adjustments potentially proposed
or authorised as part of such reorganisation plans. Furthermore, the financial
statements do not aim to reflect or provide for the consequences of the
corporate reorganisation proceedings, such as: (i) the realisable value of the
Group's assets on a liquidation basis or their availability to satisfy
liabilities, (ii) the amounts of loans and debts subject to reorganisation and
priority thereof, (iii) or the effect on the Group's consolidated income
statement of any changes potentially made to its business as a result of the
final corporate reorganisation plan. However, in view of the inherent
uncertainty brought about by the corporate reorganization proceedings,
operational challenges caused by and partly continuing as a result of water
balance issues, and the weak nickel price environment that prevailed for most of
2013 and into early 2014, the Group has made substantial impairment charges
related to its tangible assets, inventories and deferred tax assets. Further,
the challenging liquidity position and the commencement of the Corporate
reorganisation proceedings for the Company and Talvivaara Sotkamo have resulted
in breach of covenants and default events in accordance with the respective
terms and conditions of the companies' loan agreements resulting in adjustments
to the carrying values and classifications.
Business development
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 at full scale is estimated
at 350tU (ca. 770,000 pounds), corresponding to approximately 410t (900,000
pounds) of yellow cake (UO(4)). 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 2013. 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 2014 in connection
with the general update of the mine's environmental permit. In addition, a
permit for uranium extraction in accordance with the Nuclear Energy Act will be
required. The Finnish Government initially granted this permit on 1 March 2012,
but the Supreme Administrative Court resolved in December 2013 to return the
permit for reassessment by the Government. Talvivaara is currently re-applying
for the permit.
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 its
planned capacity expansion.
Talvivaara acquired in 2011-2012 an approximately 60MW capacity share in the
Fennovoima nuclear project in Finland. Due to the Company's ongoing corporate
reorganisation proceedings, Talvivaara is currently not in a position to make
further investments into the project and has therefore not been able to commit
to payments that would, according to plan, fall due during the course of 2014.
However, Talvivaara has an option until the early autumn of 2014 to recommit to
Fennovoima's financing and get an ownership corresponding to 47 MW of
electricity. For the time being the Company does not know whether it will be
able to exercise this option, and the final conclusion on the matter remains
subject to financing.
The Company has conducted wind measurements at several locations within the
mining concession area and concluded that the wind conditions in the area are
suitable for the generation of wind energy. Permitting for wind farms at the
mine site has been started and Talvivaara is continuing studies to develop a
200-260 GWh/a windmill project jointly with a third party.
Geology
In early 2013 Talvivaara undertook a project to update its ore reserves
estimates and anticipated announcing the new reserves during the second half of
2013. However, due to the Company's prioritization of the use of human resources
and funds during the course of 2013 and currently, the finalization of the
reserves has been postponed for the time being. Talvivaara notes, however, that
the mineral resources in Talvivaara remain at above 2 billion tonnes of ore, and
that the short to medium term mine plan is not impacted by the delay in updating
the ore reserves.
Research and development
Talvivaara's research and development activities in 2013 focused on water
management, enhancing bioheapleaching performance and further optimization of
the metals plant operations.
As water management has been one of the key focus areas in Talvivaara's
operations already for some time, its role in research and development has also
grown accordingly. In 2013, focus was on evaluation and testing of various water
treatment technologies, including e.g. nano filtration.
In bioheapleaching, the Company's long term pilot heap project to study the
impact of different process conditions, such as the rate of acid addition, on
the leaching performance was completed. Mineralogical studies were also carried
out in order to gain a better understanding of the relationship between the ore
characteristics and leaching performance. For production support purposes
several lab scale leaching tests were carried out and data-mining studies were
done to further optimize the operating conditions in the leaching process.
Localized tests were also carried out with production leaching pads.
In materials handling, focus was on further developing the agglomerate quality
control procedures, as it has been established that the agglomerate quality,
e.g. moisture content and stability, is one of the key variables related to the
hydrodynamic properties of the leaching heaps and hence also the leaching
performance.
Industrial scale testing at the metals recovery plant for using sulphur dioxide
for pre-reduction of the metal containing leach solution was carried out with
promising results. In practice, this process means reduction of trivalent iron
(Fe3+) to its bivalent form (Fe2+) with sulphur dioxide, which reduces hydrogen
sulphide consumption in the metals recovery process and has the potential of
generating substantial savings. In addition, the pre-reduction has in the test
work improved the quality of Talvivaara's copper product, the commercial
significance of which is increasing as the operation matures and the production
volumes increase. Other activities at the metals plant were related to
production support, for example in flocculant screening tests and lab tests to
confirm optimum process conditions in several process areas.
Talvivaara participates in various co-operation and networking projects with
universities, research centres and other companies.
Sustainable development, safety and permitting
Sustainable development and the environment
The Company started the year 2013 in a challenging situation following a
historically rainy summer that culminated in water balance issues and a gypsum
pond leakage in November 2012. Over the course of 2013, Talvivaara focused its
resources on implementing an environmental improvement programme and improving
its water management.
Talvivaara's principal environmental development target of 2013 was the
reduction of risks related to water management and the achievement of a
sustainable water balance. To promote the achievement of these targets,
Talvivaara established a water management organisation with responsibility for
overall water balance management, and for the planning and implementation of the
required short- and long-term measures.
VTT Technical Research Centre of Finland was commissioned by the Company's Board
of Directors to conduct an independent investigation into the causes and
circumstances of the gypsum pond leakage of 2012. The report was completed in
April 2013. The investigation resulted in several recommendations for corrective
measures and development, the majority of which had been implemented by
Talvivaara immediately after the leak.
In 2013, Talvivaara continued systematic investments in water treatment with
focus on rain water management, water quality improvement and process water
recycling. During the year, an essentially closed circuit for the metals
recovery plant process waters was achieved, and several field water purification
plants were constructed and commissioned.
Approximately 5.7 million cubic metres of treated water was discharged from the
mine area during the year. The discharges were limited to a volume roughly
equivalent to the amount of rainfall in the area by the environmental permit
regarding water, obtained in May 2013, which restricts water discharges to a
defined percentage of the flow in the nearby Kalliojoki-river. As a result,
approximately seven million cubic metres of surplus water remained in the mine
area at year-end.
Despite the water discharge restrictions, Talvivaara succeeded in reducing the
water related risks and increasing the emergency volumes in ponds and dams
during the year. The target was to assure that, in the event of a leakage, all
waters could be held within the mining concession area. This target was first
proven achieved when all of the water from a second gypsum pond leakage in April
2013 was contained within the protective dams. During the second half of the
year, risk reduction continued through neutralisation and removal of excess
water from the gypsum ponds and continued focus on sufficient emergency volumes.
Removal of excess water from the gypsum ponds is anticipated to be completed in
August 2014.
As a result of investments made already in the previous years, the odour
discharges relating to hydrogen sulphide and dust emissions from the mining
operations were clearly within the permitted limits. This has been evident also
from the reduced number of related notices by the neighbours. In 2013, odour
inducing concentrations decreased further by approximately 30 per cent and the
odour related notices made by the neighbouring residents reduced by 60 per cent.
In 2013 the International Nickel Institute conducted an international life cycle
analysis of nickel, covering almost all western world nickel producers.
According to the study, Talvivaara's climate and environmental impact as well as
energy consumption per tonne of nickel produced are clearly below the average of
the nickel industry. Due to the energy efficient process used by the Company,
Talvivaara's greenhouse gas emissions are 39 per cent and the usage of primary
energy 21 per cent lower than those of the average nickel producer. Talvivaara's
sulphur dioxide emissions are only 2 per cent of the average of all nickel
producers.
Talvivaara has since 2010 had a certified ISO 14001 standard compliant
environmental management system. The Company is also preparing for the
implementation of ISO 9001 standard compliant quality and OHSAS 18001 compliant
occupational health and safety management systems. Certification of these
systems is anticipated to be sought in 2015.
Environmental expenditure
Environmental investments in 2013 amounted to EUR 33.6 million, up 6 per cent
from the previous year (2012: EUR 31.7 million).
Most of Talvivaara's operational environmental costs consist of metal solution
and water treatment. Total environmental costs in 2013 amounted to EUR 35.8
million (2012: EUR 55.2 million). The substantially higher expenses of 2012
reflect the costs related to the acute treatment of the leakage waters from the
November 2012 gypsum pond accident.
Of the total environmental expenditure in 2013, the largest components were
water treatment at EUR 20.9 million, odorous gas treatment at EUR 8.8 million,
and environmental studies and analyses at EUR 3.4 million.
Safety
With respect to safety issues Talvivaara's goal is a safe and healthy working
environment. The Company is committed to continuously improving its process,
product and occupational safety. In 2013 Talvivaara focused on the improvement
of the entire organisation's safety culture.
In the autumn of 2013, an independent safety consultant, DuPont, conducted an
initial evaluation of Talvivaara's safety culture. Talvivaara will develop its
operations in the future based on the improvement proposals made by DuPont, and
the evaluation along with the improvement plans will help the Company in its
pursuit towards its zero accident target.
The injury frequency in 2013 was 30.4 lost time injuries/million working hours
(2012: 16.6 lost time injuries/million working hours).
Permitting
At the end of May 2013, Talvivaara received from the Northern Finland Regional
State Administrative Agency ("AVI") an environmental permit decision relating to
the storage, treatment and discharge of waters to the Oulujoki and Vuoksi water
systems. The permit decision contains regulations pertaining to, amongst others,
treatment and storage of waters and permit limits for discharges into downstream
water ways. The permit decision removes the annual 1.3 million cubic meters
discharge quota for purified waste waters, which has in part caused the
historical accumulation of excess waters at the mine site. The permit conditions
pertaining to maximum concentrations of harmful substances, among others
sulphate, and maximum discharge flow rate will however restrict the volume of
discharged waters in the future.
The permit decision required the Company to direct the water contained in the
existing gypsum ponds to neutralisation or back to leach solution circulation by
31 October 2013. The Vaasa Administrative Court subsequently extended the
deadline until the end of 2013. After this, the Company applied for and obtained
permission from the AVI for a two-staged emptying schedule such that section 5
of the gypsum pond should be void of excess water by the end of January 2014,
and section 6 by the end of August 2014. Prior to the end of January, Talvivaara
notified the Kainuu Centre for Economic Development, Transport and the
Environment ("Kainuu ELY-Centre") that the interim deadline of January could not
be met, however stating that the Company believes the final emptying deadline
for the entire pond to be achievable. The latest request by the Kainuu ELY-
Centre as of 25 April 2014 states that the amount of water in section 6 of the
gypsum pond must be reduced below 0.5 million cubic meters by 15 May 2014. As at
the date of the Company's 2013 financial statements on 29 April 2014, section 5
of the gypsum pond is contains practically no excess water, and the Company
believes the 15 May target is achievable.
The renewal of Talvivaara's environmental and water permit and the environmental
permit application for uranium extraction are being processed at the AVI. The
Company expects decisions on both permits during the spring of 2014.
On 5 December 2013 the Supreme Administrative Court returned the permit to
extract uranium granted to Talvivaara Sotkamo under the Nuclear Energy Act on 1
March 2012 for reassessment by the Finnish Government. According to the Supreme
Administrative Court there had been several changes in the operations of
Talvivaara Sotkamo following the permit decision, including the filing for
corporate reorganization. Therefore, the Government should reassess the permit
application documentation and, if needed, obtain additional information on the
economical and safety related requirements. The decision is not expected to have
material financial impact on the Company in the short or medium term, and
preparations for a new application are on-going.
Legal proceedings
As at the date of the Company's financial statements on 29 April 2014, there are
a number of on-going legal proceedings and police investigations in relation to
Talvivaara's mining, environmental and occupational health and safety issues. In
addition, Talvivaara is subject to, or may become subject to, private claims
seeking compensation for damages caused by environmental issues originating from
the Talvivaara mine, although Talvivaara currently believes that such claims are
not material. The current legal proceedings are further discussed in the
Company's financial statements for 2013.
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. During 2013, the Company's
focus was on developing its hazardous risk management and contingency planning.
As a result, a new risk register for environmental, safety and accident risks
was introduced. Contingency planning focused primarily on hazard risks such
power failure and dam or pond leakages.
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.
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. In the second half of
2013, the liquidity and refinancing risks realized as a result of persistent
production problems relating to excess water, and due to a substantial fall in
the nickel price. As a result, Talvivaara and its operating subsidiary
Talvivaara Sotkamo were unable to obtain new financing and applied for corporate
reorganisation, which for the two companies commenced on 29 November 2013 and
17 December 2013, respectively. Going forward, Talvivaara's key financial and
operational risks relate to the on-going corporate reorganisation proceedings
and Talvivaara's ability to obtain sufficient additional funding to continue its
operations and to return to the planned ramp-up of production.
Operationally, the Company has to date demonstrated that all of its production
processes work and can be operated on industrial scale, however 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, the return to
production ramp-up remains subject to further financing for the time being and
there may also 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 fluctuations 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.
Personnel
Talvivaara's headcount decreased somewhat from the previous year and was 549 at
the end of 2013 (2012: 588). At the end of 2013, 87.1% (2012: 88.1%) of
Talvivaara's employees were men and 12.9% (2012: 11.9%) were women. The average
age of the Company's employees was 37.9 years (2012: 37.8 years).
The challenges of 2013 year were also reflected on the Company's employees.
During the year Talvivaara adjusted its headcount to the prevailing production,
first in February and again in July by temporary lay-offs affecting part of the
personnel. As the Company's financial condition continued to weaken, Talvivaara
applied for corporate reorganization in November and started its third set of
co-operation consultations for the year. These were concluded in the beginning
of January 2014 and as a result, Talvivaara decided to lay-off gradually 246
employees for undefined period to support the reorganization process.
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.
Corporate governance statement
Talvivaara issues its Corporate Governance Statement of 2013 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 2 May 2013 in Helsinki, Finland.
The resolutions of the AGM included:
* that no dividend be paid for the financial year 2012;
* that the annual fee payable to the members of the Board for the term until
the close of the Annual General Meeting in 2014 be as follows: Chairman of
the Board EUR 120,000, Deputy Chairman (Senior Independent Director) EUR
69,000, Chairmen of the Board Committees EUR 69,000 and other Non-executive
and Executive Directors EUR 48,000;
* that the number of Board members be nine and that Mr. Tapani Järvinen, Mr.
Pekka Perä, Mr. Graham Titcombe, Mr. Edward Haslam, Ms. Eileen Carr, Mr.
Stuart Murray, Mr. Michael Rawlinson and Ms. Kirsi Sormunen be re-elected as
Board members and Ms. Maija-Liisa Friman be appointed as new member 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 2013;
* that the Shareholders' Nomination Panel be established to prepare proposals
for the election and remuneration of the members of the Board and that the
Charter of the Shareholders' Nomination Panel be approved;
* that article 8 of the Company's Articles of Association be amended to
correspond to the changes to be made to the duties of the Board Committees
due to the establishment of the Shareholder's Nomination Panel and the
current practices applied by the Company
Shares and shareholders
The number of shares issued and outstanding and registered on the Euroclear
Shareholder Register as of 31 December 2013 was 1,906,167,480. Including the
effect of the EUR 225 million convertible bond of 16 December 2010 and the
Option Schemes of 2007 and 2011, the authorised full number of shares of the
Company amounted to 2,041,901,379.
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 was between 1 April 2011
and 31 March 2013. By the end of the subscription period a total of 48,763
Talvivaara Mining Company's new shares were subscribed for under the stock
option rights 2007B. A total of 2,284,337 stock option rights 2007B remained
unexercised following the end of the subscription period and expired.
After the adjustments to terms and conditions of the 2007 stock options in April
2013, a total of 16,289,000 option rights 2007C have been issued to employees
and the subscription period for stock options 2007C was between 1 April 2012 and
31 March 2014. No new shares of Talvivaara were subscribed for under the stock
option rights 2007C in 2013 and at year-end, a total of 16,289,000 stock options
2007C remained unexercised.
After the adjustments to terms and conditions of the 2011 stock options in April
2013, a total of 9,432,500 option rights 2011B have been issued to key employees
and the subscription period for stock options 2011B is, according to the terms
of the option programme, between 1 April 2015 and 31 March 2017. However, the
implementation criteria for stock options 2011B were not fulfilled and the
options were cancelled at the end of 2013. Stock options 2011A had similarly
been cancelled at the end of 2012.
In March 2013 an Extraordinary General Meeting of Talvivaara Mining Company
resolved to approve the proposal by the Board of Directors to authorise the
Board of Directors to undertake a share issue for consideration pursuant to the
shareholders' pre-emptive subscription rights. The share issue was completed in
April 2013 and the total number of shares in Talvivaara Mining Company Plc
increased to 1,906,167,480 shares.
As at 31 December 2013, the shareholders who held more than 5% of the shares and
votes of Talvivaara were Solidium Oy (16.7%) and Pekka Perä (6.5%).
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.Following the rights issue
conducted in 2013 the subscription price and number of shares that can be
subscribed to via 2007 stock options were adjusted in accordance with the terms
and conditions of the options. The subscription price for stock option 2007C
was adjusted to GBP 0.5110 per share and the number of shares that can be
subscribed for through the exercise of stock option 2007C was increased by
13,998,600 shares (previously 2,333,100 shares).The subscription periods for
2007A, 2007B and 2007C options expired on 31 March 2012, 31 March 2013 and 31
March 2014, respectively.
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, respectively.Stock option 2011A and 2011B will not vest, as
the specified implementation criteria were not fulfilled. Following the rights
issue conducted in 2013 the subscription price and number of shares that can be
subscribed to via 2011 stock options were adjusted in accordance with the terms
and conditions of the options. The number of shares that can be subscribed for
through the exercise of the stock options 2011C was increased by 9,000,000
shares (previously 1,500,000 shares). The subscription price of 2011C stock
option is EUR 0.31.
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 ("Talvivaara
Management") for the purpose of acquiring Company shares carries an interest of
3.0%. The 1,104,000 shares held by Talvivaara Management Oy have been pledged to
the Company as security for the loan.Originally the plan was to be valid until
the publication of Talvivaara's 2013 Financial Statements, after which the
intention was to dissolve the plan in a manner which was to be determined later
and to repay the loan in full on 31 March 2014. However, the plan can be
continued for one year at a time if the Talvivaara share price after the
publication of Talvivaara's 2013 Financial Statements is lower than the average
price which Talvivaara Management paid for its Talvivaara shares. If the
dissolution of the plan is postponed as described above, the repayment date of
the loan shall be also postponed correspondingly. As at the date of Talvivaara's
2013 financial statements, no decision has been taken regarding the continuation
of the plan.
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 amounted to 2.1% of the total share capital.
During 2013 no options were allocated and no shares with the option rights
2007B (by their expiration on 31 March 2013) or 2007C were subscribed for. As at
the date of Talvivaara's 2013 financial statements on 29 April 2014, no shares
had been subscribed with the 2007C options between 31 December 2013 and the
expiration date of said options on 31 March 2014, hence there are no further
2007C options outstanding. At the end of the year, 9,000,000 2011C options were
available for allocation representing 0.5% of the total share capital.
Events after the review period
Conclusion of co-operation consultations
Talvivaara concluded its co-operation consultations on 7 January 2014. All
personnel groups in the Company and its subsidiaries Talvivaara Sotkamo and
Talvivaara Exploration were within the scope of the consultations. Following the
consultation process, Talvivaara decided to gradually lay off 246 employees for
an indefinite period. The lay-offs support the Company and Talvivaara Sotkamo's
corporate reorganisation and adjust the number of personnel to the current
operating scheme under which ore production is temporarily suspended.
As at the date of the Company's 2013 financial statements, Talvivaara's total
headcount is 505. Currently 86 employees are laid off, which is less than
anticipated when the co-operation consultations were concluded due to previously
subcontracted work having been taken in-house and done by the Group's own
workforce.
Participation in Fennovoima nuclear power project
Talvivaara announced on 21 February 2014 its support for the Fennovoima nuclear
power project, but noted that under the current circumstances the Company
focuses all its financial resources on the Sotkamo operation and the ongoing
corporate reorganisation process. For the time being Talvivaara is not in a
position to commit to additional funding of the Fennovoima project, but will
reassess its ability for further participation once more clarity into its
financing situation is obtained and the corporate reorganisation process
proceeds.
Management changes
Lassi Lammassaari, M.Sc. (Environmental Engineering) was appointed Chief
Corporate Development Officer as of 27 February 2014. He heads a newly
established Corporate Development function, which focuses on industrial
engineering, planning and development. Lassi Lammassaari has held several
positions at Talvivaara since 2005, most lately as Senior Vice President -
Projects. In his new position he is a member of the Executive Committee and
reports to CEO Pekka Perä.
Chief Operating Officer Darin Cooper resigned from his position on 7 March 2014
to pursue his career outside the Company. Chief Technology Officer Pertti
Pekkala subsequently assumed interim responsibility for the Sotkamo mine's
operations until a new COO is appointed. In addition, the Company's Technical
Executive Committee, consisting of CEO Pekka Perä, Chief Corporate Development
Officer Lassi Lammassaari, CTO Pertti Pekkala and Environmental Manager Veli-
Matti Hilla as a newly appointed member, takes an increasingly active role in
the management of the operations at the Sotkamo mine.
Non-Executive Director Kirsi Sormunen announced her resignation from the
Company's Board of Directors due to personal reasons on 7 March 2014.
Administrative injunctions
On 19 March 2014, the Kainuu ELY Centre issued an administrative injunction,
requesting Talvivaara Sotkamo to carry on the neutralization of metal and
sulphate containing waters at the site under all circumstances. Further, the ELY
Centre requested Talvivaara Sotkamo to immediately continue and complete
negotiations on the supply of additional water purification capacity at the
site, as well as on the construction of new pond capacity for purified waters.
Should Talvivaara Sotkamo fail to comply with the request, the Kainuu ELY Centre
may consider having the investments completed at the cost of Talvivaara Sotkamo.
In addition, the Kainuu ELY Centre required that the weekly utilization rate of
Talvivaara Sotkamo's existing reverse osmosis plants must stay on or above 60
per cent, failing which could give rise to an administrative penalty of EUR
100,000. Talvivaara Sotkamo has appealed the injunction to Vaasa Administrative
Court.
Loan and streaming holiday agreement with Nyrstar
On 1 April 2014, the Company and Talvivaara Sotkamo entered into a loan and
streaming holiday agreement ('the Agreement') with Nyrstar Sales and Marketing
AG ("Nyrstar"). Under the Agreement, Nyrstar makes available to Talvivaara a
loan facility of up to EUR 20 million. Nyrstar makes the facility available in
several tranches with the amount of each advance calculated with reference to a
corresponding delivery by Talvivaara Sotkamo of zinc in concentrate under the
original zinc streaming agreement of February 2010.
In the short term, the Agreement enables the continuation of the Company and
Talvivaara Sotkamo's corporate reorganisation and the process, whereby
Talvivaara explores the options of identifying potential investor(s) to
participate in a long-term, overall financial solution for the Group.
Subject to Talvivaara securing the overall financial solution, the Company also
has an option to enter into a streaming holiday for delivery volumes of up to
80,000 tonnes of zinc in concentrate. During the streaming holiday, Nyrstar
commits, outside the framework of the original contract, to purchase zinc
concentrate from Talvivaara at market terms. The streaming holiday, if used in
full, has a significant additional financing impact for the Company.
In return for the holiday, the value sharing mechanism of the original zinc
streaming agreement will be amended to reduce on a pro rata basis such that, if
the full holiday period is elected, the value sharing mechanism thereafter
becomes nil. When applied, the value sharing mechanism allows Talvivaara to
receive a cash consideration for its deliveries that is higher than the
extraction and processing fee determined in the zinc streaming agreement.
Nyrstar's obligation to extend financing under the loan facility will cease at
the earlier of the aggregate amount outstanding including accrued interest
exceeding EUR 20 million or the commencement of a streaming holiday. The zinc
concentrate deliveries entitling Talvivaara to the full loan amount are
estimated to be made during the remainder of 2014. As at the date of these
financial statements, Talvivaara has drawn down EUR 5.8 million of the Nyrstar
loan facility.
Corporate reorganisation - reports on the financial status completed
The reports on the financial status of the Company and Talvivaara Sotkamo were
completed by the Administrator of the corporate reorganisation on 14 April
2014. According to the Administrator, an executable restructuring programme can
be set up for both companies, provided that financing solutions for an interim
period and for the longer term are achieved. The Company together with the
administrator continues active discussions for securing the additional financing
following the loan and streaming holiday agreement entered into with Nyrstar on
1 April 2014.
Production update
Talvivaara produced 3,068t of nickel and 5,726t of zinc during Q1 2014. Year-to-
date production through 28 April 2014 has reached 4,203t of nickel and 8,032t of
zinc.
During the first months of the year, metals production has been stable with good
leaching performance from the two new heaps and high availability of the metals
plant. The steady production over the recent months demonstrates that the
technologies applied by Talvivaara are functional and have matured to a stage
where they can be considered reliable industrial processes.
Mining and materials handling processes have been suspended since November
2013. Subject to financing, re-start of these functions is planned to take place
in stages during the spring and the coming summer.
Short-term outlook
Market outlook
The LME nickel price has shown an approximately 30% recovery since the
implementation of the Indonesian nickel ore export ban in January 2014, moving
from levels below USD 14,000/t to above USD 18,000/t currently. The surplus in
nickel production that has been prevailing over the last few years is now
expected to turn into a deficit possibly as early as this year, which further
underpins the recent price development and may offer additional upside potential
going forward. Provided the Indonesian ore export ban stays in force, the nickel
price can be anticipated to subsequently start reflecting also the increasing
marginal cost of production across the nickel industry and lack of new committed
nickel projects to replace depleting supply from the existing operations.
Operational outlook
The operational outlook for Talvivaara is greatly dependent on the success to
closing, timing and extent of the short as well longer term financing solutions
currently under negotiation. With the Company's liquidity position allowing, the
key operational priority is to start reclaiming old primary heaps 2 and 3 as
soon as possible, preferably during Q2 2014. Moving these heaps to the secondary
pad will allow the so far poorly leached ore to be reconditioned and for
leaching to be restarted. There is significant unleached nickel in these two
heaps, which will improve production in the coming months prior to leaching from
any newly mined and stacked ore can start contributing to production. The
Company plans to re-start mining in July, provided sufficient financing is in
place at the time. Operationally, Talvivaara believes the pre-requisites for
continued production ramp-up are in place with substantial improvements having
been made over the recent months in bioheapleaching, as well as in mining and
materials handling prior to their suspension in November. Furthermore, the
metals plant is currently operating uneventfully.
Board of Directors proposal for profit distribution
The Board of Directors is proposing to the Annual General Meeting tentatively
scheduled to be held on 12 June 2014 that no dividend is declared in respect of
the year 2013.
Talvivaara Mining Company Plc
Board of Directors
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Applications for corp. reorganisation proceeding filed on 15 Nov 2013)
Audited Audited
As at As at
(all amounts in EUR '000) 31 Dec 13 31 Dec 12*
ASSETS
Non-current assets
Property, plant and equipment 304,956 809,452
Biological assets 6,641 9,125
Intangible assets 6,582 7,014
Investments in associates 6,968 5,694
Deferred tax assets - 52,588
Other receivables 8,412 2,940
Available-for-sale financial assets 2 2
-----------------------------
333,560 886,816
Current assets
Inventories 261,451 297,761
Trade receivables 10,389 32,174
Other receivables 12,047 7,980
Cash and cash equivalent 5,867 36,058
-----------------------------
289,754 373,973
-----------------------------
Total assets 623,314 1,260,788
-----------------------------
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 80 80
Share premium 8,086 8,086
Other reserves 764,603 539,559
Retained earnings (925,854) (242,962)
-----------------------------
(153,085) 304,763
Non-controlling interest in equity (134,378) 1,989
-----------------------------
Total equity (287,463) 306,752
Non-current liabilities
Borrowings 30,592 506,028
Advance payments 270,641 265,847
Other payables 270 228
Provisions 10,785 11,290
-----------------------------
312,288 783,393
Current liabilities
Borrowings 524,011 93,793
Advance payments 15,456 7,857
Trade payables 37,426 25,578
Other payables 19,066 27,179
Provisions 2,531 16,238
-----------------------------
598,489 170,643
-----------------------------
Total liabilities 910,777 954,037
-----------------------------
Total equity and liabilities 623,314 1,260,788
-----------------------------
* Equity attributable to owners of the parent company and non-controlling
interest has been restated as described in Note 44 to the consolidated financial
statements for 2013
CONSOLIDATED INCOME STATEMENT
(Applications for corp. reorganisation proceeding filed on 15 Nov
2013)
Unaudited Unaudited Audited Audited
three three twelve twelve
months to months to months to months to
(all amounts in EUR '000) 31 Dec 13 31 Dec 12* 31 Dec 13 31 Dec 12*
----------------------------------------------
Net sales 12,603 25,694 77,572 142,948
Other operating income 481 65 1,864 4,061
Changes in inventories of finished
goods and work in progress 12,329 (6,425) 53,651 50,264
Impairment charges on inventories (93,685) - (93,685) -
Materials and services (21,541) (20,057) (95,593) (117,848)
Personnel expenses (7,742) (7,470) (30,879) (28,132)
Depreciation, amortization,
depletion (13,193) (15,424) (53,197) (53,698)
Impairment charges (499,300) - (499,300) -
Other operating expenses (18,680) (33,390) (62,234) (81,183)
----------------------------------------------
Operating profit (loss) (628,728) (57,007) (701,801) (83,588)
Finance income 496 31 901 811
Finance cost (22,992) (13,794) (57,143) (46,515)
----------------------------------------------
Finance income (cost) (net) (22,496) (13,763) (56,242) (45,704)
Profit (loss) before income tax (651,224) (70,770) (758,043) (129,292)
Income tax expense (80,541) 11,380 (54,434) 25,381
----------------------------------------------
Profit (loss) for the period (731,765) (59,390) (812,477) (103,910)
----------------------------------------------
Attributable to:
Owners of the parent (611,048) (49,241) (680,920) (90,056)
Non-controlling interest (120,717) (10,149) (131,557) (13,854)
----------------------------------------------
(731,765) (59,390) (812,477) (103,910)
----------------------------------------------
Earnings per share for profit (loss) attributable to
the
owners of the parent (expressed in EUR per share)
Basic and diluted (0.43) (0.19) (0.48) (0.35)
* Loss for the year attributable to owners of the parent and non-controlling
interest as well as earnings per share for loss attributable to owners of the
parent have been restated as described in Note 44 to the consolidated financial
statements for 2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Applications for corporate reorganisation proceeding filed on 15
Nov 2013)
Unaudited Unaudited Unaudited Unaudited
three three twelve twelve
months to months to months to months to
(all amounts in EUR '000) 31 Dec 13 31 Dec 12* 31 Dec 13 31 Dec 12*
------------------------------------------------------
Loss for the period (731,765) (59,390) (812,477) (103,910)
------------------------------------------------------
Total comprehensive
income (731,765) (59,390) (812,477) (103,910)
------------------------------------------------------
Attributable to:
Owners of the parent (611,048) (49,241) (680,920) (90,056)
Non-controlling interest (120,717) (10,149) (131,557) (13,854)
------------------------------------------------------
(731,765) (59,390) (812,477) (103,910)
------------------------------------------------------
* Loss for the year and total comprehensive income attributable to owners of the
parent and non-controlling interest as well as earnings per share for loss
attributable to owners of the parent have been restated as described in Note 44
to the consolidated financial statements for 2013.
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 A B C D E F G H I J
EUR '000)
--------------------------------------------------------------------------------
1 Jan 12* 80 278 8,086 - 404,069 45,462 (151,129) 306, 15, 322,
847 733 580
Profit (loss) - - (90,056) (90, (13, (103,
for the period 056) 854) 910)
----------------------------------------------------------------
Total
comprehensive - - - - - - (90,056) (90, (13, (103,
income 056) 854) 910)
for the period
Transactions
with
owners
Stock options - (278) - - 5,197 - - 4, - 4,
920 920
Senior unsecured
convertible - - - - (251) - (251) - (251)
bonds
due 2013
Perpetual - - - - - 2,354 (1,777) 577 110 687
capital loan
Share issue - - - - 81,482 - 81, - 81,
482 482
Incentive
arrangement for - - - - - 94 - 94 - 94
Executive
Management
Employee share
option scheme
- value of 1, 1,
employee - - - - - 1,151 - 151 - 151
services
----------------------------------------------------------------
Total
contribution by 87, 88,
and - (278) - - 86,679 3,348 (1,777) 973 110 082
distribution to
owners
Total 87, 88,
transactions - (278) - - 86,679 3,348 (1,777) 973 110 082
with owners
----------------------------------------------------------------
31 Dec 12* 80 - 8,086 - 490,749 48,810 (242,962) 304, 1, 306,
763 989 752
----------------------------------------------------------------
1 Jan 13 80 - 8,086 - 490,749 48,810 (242,962) 304, 1, 306,
763 989 752
Profit (loss) - - - - - - (680,920) (680, (131, (812,
for the period 920) 557) 477)
----------------------------------------------------------------
Total
comprehensive - - - - - - (680,920) (680, (131, (812,
income for the 920) 557) 477)
period
Transactions
with owners
Rights issue - - - - 250,827 - - 250, - 250,
827 827
Senior unsecured
convertible - - - - - (2,369) - (2, - (2,
bonds 369) 369)
due 2013
Perpetual - - - - - (23,276) (1,971) (25, (4, (30,
capital loan 247) 811) 058)
Incentive
arrangement - - - - (93) - (93) - (93)
for Executive
Management
Employee share
option scheme
- value of
employee - - - - - (44) - (44) - (44)
services
----------------------------------------------------------------
Total
contribution by 223, 218,
and - - - - 250,827 (25,782) (1,971) 074 (4,811) 263
distribution to
owners
Total 223, (4, 218,
transactions - - - - 250,827 (25,782) (1,971) 074 811) 263
with owners
----------------------------------------------------------------
31 Dec 13 80 - 8,086 - 741,576 23,028 (925,854) (153, (134, (287,
085) 378) 463)
----------------------------------------------------------------
* Equity attributable to owners of the parent company and non-controlling
interest has been restated as described in Note 44 to the consolidated financial
statements for 2013.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Applications for corp. reorganisation proceeding filed on
15 Nov 2013)
Unaudited Unaudited Audited Audited
three three twelve twelve
months to months to months to months to
(all amounts in EUR '000) 31 Dec 13 31 Dec 12 31 Dec 13 31 Dec 12
----------------------------------------
Cash flows from operating activities
Loss for the period (731,765) (59,390) (812,477) (103,910)
Adjustments for
Tax 80,541 (11,380) 54,434 (25,381)
Depreciation and amortization 13,193 15,424 53,197 53,698
Impairment charges on PPE 499,300 - 499,300 -
Impairment charges on inventories 93,685 - 93,685 -
Other adjustments 4,071 16,526 (16,175) (2,814)
Interest income (496) (31) (901) (811)
Fair value gains on financial assets at
fair value through profit or loss - 11 - (5)
Interest expense 22,992 13,794 57,143 46,515
----------------------------------------
(18,479) (25,046) (71,793) (32,709)
Change in working capital
Decrease(+)/increase(-) in other
receivables (1,012) 19,043 6,523 29,336
Decrease (+)/increase (-) in inventories (11,062) 4,166 (61,009) (57,325)
Decrease(-)/increase(+) in trade and
other payables 4,550 (12,440) (2,006) (37,843)
----------------------------------------
Change in working capital (7,524) 10,769 (56,491) (65,832)
----------------------------------------
(26,003) (14,277) (128,284) (98,540)
Interest and other finance cost paid (7,488) (15,279) (26,025) (28,654)
Interest and other finance income 211 78 346 554
Income taxes paid (5) - (17) -
----------------------------------------
Net cash used in operating activities (33,285) (29,478) (153,980) (126,640)
Cash flows from investing activities
Investments in associates (258) (93) (1,274) (5,066)
Purchases of property, plant and
equipment (7,379) (29,531) (60,051) (97,171)
Purchases of biological assets - (55) (262) (55)
Purchases of intangible assets - (12) (221) (225)
Proceeds from sale of property, plant
and equipment - - - 18
Proceeds from sale of biological assets 1,015 207 1,194 308
----------------------------------------
Net cash used in investing activities (6,622) (29,484) (60,615) (102,191)
Cash flows from financing activities
Proceeds from share issue net of
transactions costs - - 247,390 81,108
Realised stock options - - - 4,920
Related party investment in Talvivaara
shares - - (186) -
Proceeds from interest-bearing
liabilities - - - 130,000
Proceeds from advance payments - 9,731 19,488 32,080
Buy-back of convertible bonds - - - (8,168)
Payment of interest-bearing liabilities (690) (2,017) (82,288) (15,070)
----------------------------------------
Net cash generated from financing
activities (690) 7,714 184,404 224,871
Net increase (decrease) in cash and cash
equivalents (40,597) (51,248) (30,191) (3,961)
Cash and cash equivalents at beginning
of the period 46,463 87,306 36,058 40,019
----------------------------------------
Cash and cash equivalents at end of the
period 5,867 36,058 5,867 36,058
----------------------------------------
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
taking into account the corporate reorganisation proceedings that commenced in
respect of the Company on 29 November 2013 and in respect of Talvivaara Sotkamo
on 17 December 2013. The reorganisation proceedings are governed by the
Reorganisation Act. The reorganisation proceedings and their impact to the
preparation of the 2013 financial statements are explained in more detail in the
audited consolidated financial statements under Note 1.
As described elsewhere in this earnings release and in Note 1 to the audited
consolidated financial statements authorised for issue on April [29], 2014 under
the heading Going concern, the financial statements have been prepared on a
going concern basis despite the company's challenging liquidity position as at
the date of the authorisation of the financial statements, the Board of
Directors, the Directors, Management and the Administrator do not contemplate
the liquidation of the Company or Talvivaara Sotkamo.
Further, the ongoing reorganisation proceedings and the Administrator's and the
District Court's role have been considered in the preparation of both the
consolidated and parent company financial information as described under Note 1
to the audited consolidated financial statements under Basis of Presentation.
This year-end report should be read in conjunction with our audited consolidated
financial statements for year 2013 authorised for issue on 29 April 2014.
2. Property, plant and equipment
Machinery Construction Land Other
and in and tangible
(all amounts in EUR '000) equipment progress buildings assets Total
----------------------------------------------------
Gross carrying amount at 1
Jan 13 376,741 114,378 281,208 229,479 1,001,807
Additions 539 49,457 8 - 50,004
Deductions - (2,652) - - (2,652)
Transfers 29,802 (56,030) 13,562 12,666 -
----------------------------------------------------
Gross carrying amount at 31
Dec 13 407,082 105,153 294,778 242,145 1,049,159
----------------------------------------------------
Accumulated depreciation
and impairment losses at 1
Jan 13 96,675 - 44,918 50,761 192,354
Depreciation for the period 31,112 - 12,784 8,655 52,550
Impairments 165,634 67,305 147,767 118,594 499,300
----------------------------------------------------
Accumulated depreciation
and impairment losses at 31
Dec 13 293,421 67,305 205,469 178,010 744,204
----------------------------------------------------
Carrying amount at 1 Jan 13 280,066 114,378 236,290 178,718 809,452
----------------------------------------------------
Carrying amount at 31 Dec 13 113,661 37,848 89,309 64,135 304,955
----------------------------------------------------
The decline in the nickel market price, challenges related to the production and
water management together with the Company's weakened liquidity and the filing
for corporate reorganisation by the Company and Talvivaara Sotkamo on 15
November 2013 were identified as impairment indicators by management and,
following an impairment test performed for Talvivaara's mining assets in
Sotkamo, an impairment charge of EUR 499 million was made at the year-end 2013.
Accordingly, the carrying amount of the PP&E was written down to its recoverable
amount of EUR 305 million. Impairment charges and judgement applied are further
discussed in the audited consolidated financial statements for year 2013 in
notes 6 and 9.
3. Trade receivables
(all amounts in EUR '000)
31 Dec 13 31 Dec 12
--------------------
Nickel-Cobalt sulphide 9,977 25,254
Zinc sulphide 375 6,912
Copper sulphide 37 8
--------------------
Total trade receivables 10,389 32,174
--------------------
4. Inventories
(all amounts in EUR '000)
As at 31 Dec 13 As at 31 Dec 12
--------------------------------
Raw materials and consumables 24,800 21,077
Work in progress 234,193 272,775
Finished products 2,457 3,909
--------------------------------
Total inventories 261,451 297,761
--------------------------------
In late 2013, the decision was taken to no longer actively leach the oldest
parts of the secondary heaps and to disconnect them from the leach solution
circulation in the near future. Accordingly, it was concluded that the remaining
metals in these heap sections would no longer be recoverable and that the
estimated cost of completion relative to the metal contents and anticipated
recoveries in the actively leached heap sections would therefore increase. In
view of the anticipated metal prices in the foreseeable future, it was further
concluded that the net realizable value of the actively leached inventory was
less than its estimated cost of completion. As a result, the Company recognised
a write-down of EUR 93.7 million for the work in progress inventory. As at 31
December 2013, the carrying amount of work in progress inventory after the
write-down was EUR 234 million, reflecting its net realisable value.
The write-down of finished products recognised as expense amounted to EUR 0.9
million in 2013 (2012: EUR 0.1 million). In addition, Talvivaara had earlier, as
at 30 September 2013, recognised a write-down of work in progress inventory of
EUR 3.6 million.
Write-downs of inventories are further discussed in Notes 6 and 17 to the
audited consolidated financial statements for year 2013.
5. Borrowings
(all amounts in EUR '000)
Non-current As at 31 Dec 13 As at 31 Dec 12
--------------------------------
Capital loans - 1,405
Investment and Working Capital loan - 51,600
Senior Unsecured Bonds due 2017 - 108,683
Revolving Credit Facility - 69,451
Senior Unsecured Convertible Bonds due 2015 - 225,875
Finance lease liabilities 17,000 30,748
Other 13,593 18,266
--------------------------------
30,592 506,028
--------------------------------
Capital loans 1,405 -
Perpetual capital loan 35,106 -
Investment and Working Capital loan 57,855 6,430
Senior Unsecured Convertible Bonds due 2013 - 75,805
Finance lease liabilities 7,032 11,558
Revolving Credit Facility 70,000 -
Senior Unsecured Bonds due 2017 110,000 -
Senior Unsecured Convertible Bonds due 2015 242,613 -
--------------------------------
524,011 93,793
--------------------------------
Total borrowings 554,603 599,821
--------------------------------
Of the above tabled borrowings and capital loans, all others except the finance
lease liabilities are reorganisation debts that may be restructured as part of
the corporate reorganisation programme. The secured borrowings, which comprise
the Revolving Credit Facility and the Investment and Working Capital Loan, may
only be reduced if and to the extent the security pledged to them does not cover
their nominal amount. Finance lease liabilities are reorganisation debts only
to the extent there were unpaid, overdue lease payments at the time of the
Company and Talvivaara Sotkamo's application for corporate reorganisation. The
amount of such overdue lease payments was approximately EUR 1.15 million. All
amounts of reorganisation debts remain subject to change at the time of these
financial statements and may only be finalized as the eventual reorganisation
programmes are authorised.
The majority of the Group's long-term borrowings have been reclassified as
current following breach of covenants or events of default stemming from the
Company and Talvivaara Sotkamo applying for corporate reorganisation. However,
as the restructuring plan which is expected to be developed and authorised as
part of the ongoing corporate reorganisation proceedings has not yet been
prepared, there is uncertainty about the repayment amounts and maturities of the
borrowings. Further, the breach of covenants or events of default have resulted
in the measurement of borrowings at their nominal value. As a result, the
unamortised transaction costs have also been recognised as expenses. Detailed
information is disclosed in notes 5 and 23 to the audited consolidated financial
statements for year 2013.
6. Advance payments
(all amounts in EUR '000)
Non-current As at 31 Dec 13 As at 31 Dec 12
--------------------------------
Deferred zinc sales revenue 216,713 219,385
Deferred uranium sales revenue 53,928 46,462
--------------------------------
270,641 265,847
--------------------------------
Current
Deferred zinc sales revenue 15,456 7,790
Other - 67
--------------------------------
15,456 7,857
--------------------------------
Total advance payments 286,097 273,704
--------------------------------
7. Provisions
(all amounts in EUR '000)
Gypsum Water
pond balance Environmental Mining
leakage management restoration fee Total
-----------------------------------------------------
As at 31 Dec 2011 - - 5,925 110 6,035
-----------------------------------------------------
Charged/(credited) to
the income statement:
Additional provisions 12,156 9,082 216 44 21,497
Unwinding of discount - - (5) - (5) -----------------------------------------------------
As at 31 Dec 2012 12,156 9,082 6,136 155 27,528
-----------------------------------------------------
Charged/(credited) to
the income statement:
Additional provisions - 3,965 694 7 4,666
Unused amounts reversed (579) - - - (579)
Unwinding of discount - - 19 - 19
Used during the period (7,802) (10,516) - - (18,318)
-----------------------------------------------------
As at 31 Dec 2013 3,775 2,531 6,849 162 13,316
-----------------------------------------------------
The non-current and current portions of provisions are as follows:
(all amounts in EUR '000) As at 31 Dec 13 As at 31 Dec 12
-----------------------------------
Non-current
Gypsum pond leakage 3,775 5,000
Environmental restoration 6,849 6,136
Mining fee 161 154
-----------------------------------
10,785 11,290
Current
Gypsum pond leakage - 7,156
Water balance management 2,531 9,082
-----------------------------------
2,531 16,238
-----------------------------------
Total 13,316 27,528
-----------------------------------
8. Changes in the number of shares issued
Number of
shares --------------
As at 31 Dec 12 272,309,640
Rights issue 1,633,857,840
--------------
As at 31 Dec 13 1,906,167,480
--------------
9. Contingencies and commitments
(all amounts in EUR '000)
The future aggregate minimum lease payments under non cancellable
operating leases
As at 31 Dec 13 As at 31 Dec 12
--------------------------------
Not later than 1 year 1,812 1,910
Later than 1 year and not later than 5 years 552 1,036
Later than 5 years 29 47
--------------------------------
2,393 2,993
--------------------------------
Capital commitments
At 31 December 2013, the Group had commitments of EUR 1.2 million (31 December
2012: EUR 15.1 million) principally relating to the completion of the Talvivaara
mine and improving its environmental safety as well as the reliability and
expansion of production capacity. These commitments are for the acquisition of
new property, plant and equipment.
10. Deferred tax asset
Talvivaara has in its historical financial statements and through the 30
September 2013 interim closing continued to recognise deferred tax assets on tax
loss carry forwards in its consolidated balance sheet. As at 31 December 2013
the Company undertook a review of the amount of deferred tax assets recognised
on tax loss carry forwards in order to assess the recoverability of the recorded
deferred tax assets. Based on the detailed review, management concluded that,
due to the historical losses of the mine project, the experienced delays in the
ramp-up process, the material uncertainties related to the Company's ability to
obtain further funding and its ongoing corporate restructuring proceedings, it
has de-recognized deferred tax assets in the amount of EUR 75.5 million in its
FY 2013 results, leaving the Company with a zero net deferred tax position.
Detailed information is disclosed in notes 6 and 26 to the audited consolidated
financial statements for year 2013.
Talvivaara Mining Company Plc
Key financial figures of the Group
Three Three Twelve Twelve
months to months to months to months to
31 Dec 13 31 Dec 12 31 Dec 13 31 Dec 12
-----------------------------------------
Net sales EUR '000 12,603 25,694 77,572 142,948
Operating loss EUR '000 (628,728) (57,007) (701,801) (83,588)
Operating loss percentage -4988.7 % -221.9 % -904.7 % -58.5 %
Loss before tax EUR '000 (651,224) (70,770) (758,043) (129,292)
Loss for the period EUR '000 (731,765) (59,390) (812,447) (103,910)
Return on equity -779.2 % -17.7 % -8424.0 % -33.0 %
Equity-to-assets ratio -46.1 % 24.3 % -46.1 % 24.3 %
Net interest-bearing debt EUR '000 548,736 563,763 548,736 563,763
Debt-to-equity ratio 190.9 % 183.8 % 190.9 % 183.8 %
Return on investment -113.2 % -4.9 % -128.7 % -6.7 %
Capital expenditure EUR '000 7,379 29,598 60,535 97,451
Property, plant and equipment EUR '000 304,956 809,452 304,956 809,452
Borrowings EUR '000 554,603 599,821 554,603 599,821
Cash and cash equivalents EUR '000 5,867 36,058 5,867 36,058
(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.
Share-related key
figures
Three Three Twelve Twelve
months to months to months to months to
31 Dec 13 31 Dec 12 31 Dec 13 31 Dec 12
----------------------------------------------------
Earnings per
share(4) EUR (0.43) (0.19) (0.48) (0.35)
Equity per share* EUR (0.19) 1.15 (0.19) 1.15
Development of
share price
at London Stock
Exchange
Average trading
price(1) EUR 0.07 1.35 0.12 2.50
GBP 0.06 1.09 0.10 2.02
Lowest trading
price(1) EUR 0.03 1.03 0.03 1.03
GBP 0.03 0.83 0.03 0.83
Highest trading
price(1) EUR 0.11 1.99 1.34 4.43
GBP 0.09 1.61 1.14 3.59
Trading price at
the
end of the
period(2) EUR 0.08 1.25 0.08 1.25
GBP 0.07 1.02 0.07 1.02
Change during the
period -19.7 % -32.8 % -93.2 % -48.8 %
Price-earnings
ratio neg. neg. neg. neg.
Market
capitalization at
the end of the
period(3) EUR '000 159,759 341,597 159,759 341,597
GBP '000 133,622 278,777 133,622 278,777
Development in
trading volume
1000
Trading volume shares 488,298 23,737 776,597 103,218
In relation to
weighted average
number of shares 34.1 % 8.9 % 54.2 % 38.7 %
Development of
share
price at OMX
Helsinki
Average trading
price EUR 0.07 1.31 0.11 2.31
Lowest trading
price EUR 0.03 1.08 0.03 1.08
Highest trading
price EUR 0.11 2.00 1.39 4.35
Trading price at
the end
of the period EUR 0.08 1.24 0.08 1.24
Change during the
period -26.8 % -34.5 % -93.9 % -50.2 %
Price-earnings
ratio neg. neg. neg. neg.
Market
capitalization at
the end of the
period EUR '000 145,059 338,209 145,059 338,209
Development in
trading volume
1000
Trading volume shares 1,833,128 62,472 3,086,423 209,565
In relation to
weighted
average number of
shares 128.0 % 23.4 % 215.6 % 78.5 %
Adjusted average
number of shares 1,431,677,258 266,846,084 1,431,677,258 266,846,084
Fully diluted
average
number of shares 1,530,295,193 265,742,084 1,530,295,193 265,742,084
Number of shares
at the
end of the period 1,906,167,480 272,309,640 1,906,167,480 272,309,640
(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.
(4)) 2012 figures restated as described in note 44 to the audited consolidated
financial statements for year 2013
Employee-related key figures
Three Three Twelve Twelve
months to months to months to months to
31 Dec 13 31 Dec 12 31 Dec 13 31 Dec 12
----------------------------------------
Wages and salaries EUR '000 4,204 5,982 23,274 23,080
Average number of employees 558 584 603 547
Number of employees at the
end of the period 549 588 549 588
Other figures
Three Three Twelve Twelve
months to months to months to months to
31 Dec 13 31 Dec 12 31 Dec 13 31 Dec 12
------------------------------------------
Share options outstanding
at the end of the period 16,289,000 5,958,837 16,289,000 5,958,837
Number of shares to be issued
against the outstanding share options 16,289,000 5,958,837 16,289,000 5,958,837
Rights to vote of shares to be issued
against the outstanding share options 0.8 % 2.1 % 0.8 % 2.1 %
Talvivaara Mining Company Plc
Key financial figures of the Group
Return on equity 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 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 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
[HUG#1781328]
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