2014-05-28 08:12:28 CEST
2014-05-28 08:13:21 CEST
REGULATED INFORMATION
Talvivaaran Kaivososakeyhtiö Oyj - Interim report (Q1 and Q3)
Talvivaara Mining Company Interim Report for January-March 2014
Stock Exchange Release
Talvivaara Mining Company Plc
28 May 2014
Talvivaara Mining Company Interim Report for January-March 2014
Corporate reorganisation proceedings in progress
Metals recovery plant and bioheapleaching in stable operation
Highlights of Q1 2014
* Nickel production of 3,068t and zinc production of 5,726t; best quarter
since Q3 2012
* Net sales of EUR 29.0 million
* Operating loss of EUR (7.1) million
* New heaps leached well and provided most of the produced metals during the
quarter;
nickel grades in solution around 1.5g/l
* Metals plant in stable operation throughout the quarter
* Ore production remained suspended with re-start subject to securing
additional financing
Highlights after the reporting period
* 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
* Talvivaara Sotkamo was granted an environmental permit decision on 30 April
2014 relating to its whole operation and uranium recovery; however,
operations continue under the old permit for the time being, as the new
permit is not yet final and binding
* Bioheapleaching and metals recovery operations continue steadily; year-to-
date metals production through 26 May amounted to 5,053t of nickel and
9,592t of zinc
Corporate reorganisation
* Reports by the Administrator on the financial status of Talvivaara Mining
Company Plc ("Talvivaara" or the "Company") and Talvivaara Sotkamo completed
on 14 April 2014 and conclude that executable restructuring programmes can
be set up for both companies subject to financing solutions being achieved
* The District Court of Espoo granted on 21 May 2014 an extension to the
deadlines for submitting the proposals for the respective reorganisation
programmes of the Company and Talvivaara Sotkamo until
30 September 2014 as applied by the Administrator
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
------------------------------------------+--------+----------+-------+--------
| Q1| Q4| Q1| FY
EUR million | 2014| 2013| 2013| 2013
------------------------------------------+--------+----------+-------+--------
Net sales | 29.0| 12.6| 27.6| 77.6
------------------------------------------+--------+----------+-------+--------
Operating loss | (7.1)| (628.7)| (20.0)| (701.8)
------------------------------------------+--------+----------+-------+--------
% of net sales | (24.4)%|(4,988.7)%|(72.4)%|(904.7)%
------------------------------------------+--------+----------+-------+--------
Loss for the period | (17.1)| (731.8)| (23.9)| (812.4)
------------------------------------------+--------+----------+-------+--------
Earnings per share, EUR | (0.01)| (0.43)| (0.09)| (0.48)
------------------------------------------+--------+----------+-------+--------
Equity-to-assets ratio | (49.9)%| (46.1)%| 25.5%| (46.1)%
------------------------------------------+--------+----------+-------+--------
Net interest bearing debt | 552.1| 548.7| 530.1| 548.7
------------------------------------------+--------+----------+-------+--------
Debt-to-equity ratio |(181.3)%| (190.9)%| 159.1%|(190.9)%
------------------------------------------+--------+----------+-------+--------
Capital expenditure | 1.5| 7.4| 17.3| 60.5
------------------------------------------+--------+----------+-------+--------
Cash and cash equivalents at the end of | 1.1| 5.9| 68.7| 5.9
the period | | | |
------------------------------------------+--------+----------+-------+--------
Number of employees at the end of the | 516| 549| 583| 549
period | | | |
------------------------------------------+--------+----------+-------+--------
All quarterly figures in this release are unaudited. Full year figures are
audited.
CEO Pekka Perä comments: "Our first quarter 2014 results reflect an
operationally steady period with best nickel and zinc production since Q3 2012.
Our new ore heaps, primary heaps 1 and 4, demonstrated very good leaching
performance after having started to contribute to our metals production towards
the end of 2013. Our metals recovery plant also performed uneventfully, which,
together with the improvements in bioheapleaching, gives us confidence that our
processes have come of age and can be operated in a reliable, industrial
fashion.
Our financial results continued to be impacted by the weak nickel price that
persisted through most of the first quarter and the yet limited production
volumes obtainable from the currently functioning two primary heaps, resulting
in an operating loss of EUR 7.1 million. However, our cost profile compared to
the year before confirmed substantial savings as a result of our on-going work
towards better operational efficiency, and the write-downs recognized on our
fixed assets at year-end 2013 resulted in a considerable reduction in
depreciation. All-in-all, though, we cannot be content with the results
achieved, but must strive for further improvements with the target of eventually
being able to operate profitably also during the lows of the commodity cycles.
Over the recent months, the sentiment in the nickel market has turned for the
positive with prices improving from around USD 14,000/t in January and USD
15,000-16,000/t in March to around USD 19,500/t currently. 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.
We believe the good results in bioheapleaching over the last several months as
well as the recent improvement in the nickel market are helpful in our on-going
financing efforts. As the first funding step since the commencement of both
Talvivaara Mining Company and Talvivaara Sotkamo's corporate reorganisations in
late 2013, we entered into a loan and streaming holiday agreement with our zinc
client Nyrstar in the beginning of April. This entitles us to an up to EUR 20
million loan, drawn down in stages in relation to zinc deliveries, and an option
to sell up to 80,000t of zinc to Nyrstar at market prices, which would have an
additional financing impact of more than EUR 50 million at current zinc prices.
Further financing negotiations are now also progressing and we hope to be in a
position to announce positive news on their completion in the coming months.The most important short term use of funds for us would be the re-start of
mining and materials handling operations, which have been suspended since
November 2013. The new Nyrstar agreement and the improvement in nickel price
have already given us the opportunity to start reclaiming of the poorly leached
primary heaps on a trial basis, but more funding needs to be secured before we
can commit to full scale reclaiming and the re-start of mining new ore.
In longer term, financing will also be needed for our environmental commitments,
particularly those relating to water management. Following a relatively light
spring melt, the current status of the water balance is reasonably good with
ample emergency volume in all ponds and dams. However, planning of longer term
solutions, including e.g. discharge of treated water to an alternative waterway
and additional reverse osmosis capacity, continues and must be financed in due
course.
Talvivaara Sotkamo was granted an environmental permit decision relating to its
whole operation and uranium recovery by the Northern Finland Regional State
Administrative Agency on 30 April 2014. We have since assessed the decision and
will appeal against several parts of the decision, including amongst other
things the method of assessment of the securities to be set as well as some
other permit conditions which are deemed to be against the prevailing permitting
practice. As the new permit decision will only be applicable when the appeal
processes have been completed, Talvivaara will continue to operate under the
previously obtained, existing permits for the time being and continue its work
towards increasingly sustainable operations."
Enquiries:
Talvivaara Mining Company Plc. Tel. +358 20 712 9800
Pekka Perä, CEO
Saila Miettinen-Lähde, Deputy CEO and CFO
Webcast and conference call on 28 May 2014 at 11:00 am Finland (EET) / 9:00 am
UK (GMT)
A combined webcast and conference call on the January-March 2014 Interim Result
will be held on 28 May 2014 at 11:00am Finland (EET) / 9:00 am UK (GMT). The
call will be held in English.
The webcast can be accessed through:
http://qsb.webcast.fi/t/talvivaara/talvivaara_2014_0528_q1/
A conference call facility will be available for a Q&A with senior management
following the presentation.
Participant - Finland: +358 (0)9 2313 9201
Participant - UK: +44 (0)20 7162 0077
Participant - US: +1 334 323 6201
Conference ID: 945070
The webcast will also be available for viewing on the Talvivaara website shortly
after the event.
Financial review
Q1 2014 (January-March)
Net sales and financial result
Talvivaara's net sales for nickel and cobalt deliveries to Norilsk Nickel during
the quarter ended 31 March 2014 amounted to EUR 29.0 million (Q1 2013: EUR 27.6
million). No zinc deliveries to Nyrstar Sales and Marketing AG under the zinc
streaming agreement were made. Compared to Q4 2013, net sales increased by 130%
due to increased nickel product deliveries enabled by stable production
throughout the quarter. Nickel prices remained depressed at around USD 14,000/t
for most of the quarter, hence the sharp increase in nickel price seen towards
the end of Q1 2014 and thereafter did not yet have a material impact on the
first quarter revenues and financial results. Product deliveries in Q1 2014
amounted to 3,107t of nickel and 63t of cobalt (Q1 2013: 2,746t of nickel,
2,217t of zinc, 88t of cobalt).
The Group's other operating income amounted to EUR 0.5 million (Q1 2013: EUR
0.7 million) and mainly resulted sales of trees.
Changes in inventories of finished goods and work in progress amounted to EUR
(1.2) million (Q1 2013: EUR 7.3 million). Due to the temporary suspension of
mining and materials handling operations, no new ore was stacked on leaching
heaps during Q1 2014. The change in work in progress therefore primarily
reflected the removal of metals from the existing heaps as a result of metal
sulphide production.
Personnel expenses were EUR (6.2) million in Q1 2014 (Q1 2013: EUR (7.3)
million). The decrease in the personnel expenses compared to the year before
reflects a decrease in the number of employees as well as the lay-offs
implemented subsequent to the conclusion of the Group's co-operation
consultations on 7 January 2014.
Operating loss for Q1 2014 was EUR (7.1) million (Q1 2013: EUR (20.0) million).
Materials and services were EUR (14.9) million in Q1 2014 (Q1 2013: EUR (22.6)
million) and other operating expenses were EUR (8.4) million (Q1 2013: EUR
(12.6) million). Metals production in Q1 2014 was higher than that the year
before, yet a substantial reduction in costs was seen. This reflects the savings
and improved operating efficiency in metals recovery realized through the
Company's Turnaround project in 2013. Mining and materials handling were
suspended throughout Q1 2014 as well as the first quarter of the year before
with the exception of reclaiming, which was operational in January 2013.
Depreciation decreased from EUR (12.6) million in Q1 2013 to EUR (8.4) million
in Q1 2014 as a result of the impairment charges on property, plant and
equipment recognised at the end of 2013. The reduction in depreciation is,
however, not directly proportional to the impairment charge, as depreciations on
leased equipment continued unaffected.
Finance income for Q1 2014 was EUR 0.2 million (Q1 2013: EUR 0.3 million).
Finance costs of EUR (10.2) million (Q1 2013: EUR (12.1) million) were mainly
related to interest accrued on borrowings. However, due to the ongoing corporate
reorganisation proceedings of the Company and Talvivaara Sotkamo, no interest
payments on borrowings, with the exception of leasing arrangements, were made.
The eventual treatment of interests and repayment of restructuring debt will be
decided as a part of the reorganisation programmes, the proposals for which are
due to be submitted by 30 September 2014.
Loss for the period and the total comprehensive income amounted to EUR (17.1)
million (Q1 2013: EUR (23.9) million). Earnings per share were EUR (0.01) in Q1
2014 (Q1 2013: EUR (0.09)).
Balance sheet
Capital expenditure in Q1 2014 totalled EUR 1.5 million (Q1 2013: EUR 17.3
million). The expenditure primarily related to water management. On the
consolidated statement of financial position as at 31 March 2014, property,
plant and equipment totalled EUR 300.5 million (31 December 2013: EUR 305.0
million), reflecting the EUR 499.3 million impairment charge recognized at year-
end 2013.
In the Group's assets, inventories amounted to EUR 259.9 million on 31 March
2014 (31 December 2013: EUR 261.5 million). At year-end 2013, an impairment
charge of EUR 93.7 million was recognized on the inventory. Subsequently, the
decrease in inventory in Q1 2014 reflects metals production from the heaps while
no new ore was added to the inventory due to the temporary suspension of ore
production.
Trade receivables amounted to EUR 16.3 million on 31 March 2014 (31 December
2013: EUR 10.4 million). The increase compared to the year before was
attributable to the discontinuation of the sale of receivables and higher amount
of product deliveries. Nickel price was, however, lower than in Q1 2013, which
on the other hand had a decreasing impact on the receivables.
On 31 March 2014, cash and cash equivalents totalled EUR 1.1 million (31
December 2013: EUR 5.9 million).
In equity and liabilities, total equity amounted to EUR (304.6) million on 31
March 2014 (31 December 2013: EUR (287.5) million).
Provisions decreased from EUR 13.3 million on 31 December 2013 to EUR 10.9
million at the end of March 2014, reflecting costs related to water management
and the gypsum pond leakage of November 2012, and the corresponding de-
recognition of provisions. The incurred costs came from the treatment of excess
waters with limestone and milk of lime.
Borrowings decreased from EUR 554.6 million on 31 December 2013 to EUR 553.1
million at the end of March 2014. The changes in borrowings during Q1 2014
mainly related to finance lease liabilities. Most of the Group's other debts are
restructuring debts, the payment terms of which, including repayment amounts,
interests and repayment schedules, will be decided as part of the Company and
Talvivaara Sotkamo's reorganisation programmes. Proposals for the reorganisation
programmes are due to be submitted by the Administrator by 30 September 2014.
Total advance payments as at 31 March 2014 amounted to EUR 286.1 million, which
is the same value as at 31 December 2013, as no zinc deliveries to Nyrstar took
place during the quarter.
Total equity and liabilities as at 31 March 2014 amounted to EUR 610.7 million
(31 December 2013: EUR 623.3 million).
Going concern
Talvivaara's interim results for the first quarter of 2014 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 financing impact of more than EUR 50 million at
current market prices for zinc.
The agreement with Nyrstar, together with the recent positive development in
nickel price, have 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/or a
long-term, overall financial solution for the Group.
As of the date of the announcement of the Company's Q1 2014 interim results, 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 Q1 2014 interim results on 28 May 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
Q1 2014 interim results do not reflect any adjustments potentially proposed or
authorised as part of such reorganisation plans. Furthermore, the interim
results 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 in its FY 2013 financial statements
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 of such loans.
Progress of corporate reorganisation
Upon deciding to commence the reorganisation proceedings of the Company and
Talvivaara Sotkamo on
29 November 2013 and 17 December 2013, respectively, the District Court of
Espoo, Finland, appointed Mr. Pekka Jaatinen, Attorney-at-Law, from Castrèn &
Snellman Attorneys Ltd. to act as the Administrator for both processes.
On 17 January 2014, the District Court of Espoo issued a ruling in respect of
certain deadlines in connection with the Company and Talvivaara Sotkamo's
respective corporate reorganisations. According to the Court's ruling, reports
on the financial status of both companies were to be completed by 28 March
2014, and proposals for their respective reorganisation were to be submitted by
the Administrator by 28 May 2014. However, the District Court has since amended
these deadlines such that the reports on the financial status of the companies
were completed on 14 April 2014, and the new deadline for the submission of the
reorganisation proposals is 30 September 2014.
The District Court has also appointed creditor committees, which will act as the
joint representatives of the creditors in the reorganisation proceedings of both
companies. 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. The
creditor committees of the Company and Talvivaara Sotkamo have the same
composition.
Production review
Talvivaara produced 3,068t (Q1 2013: 2,732t) of nickel and 5,726t (Q1
2013: 3,128t) of zinc during Q1 2014. Metals production was stable with good
leaching performance from the two new heaps and high availability of the metals
plant. 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 coming summer and autumn.
As a result of the improved grades in leach solution from the new primary heaps
1 and 4, the nickel grade in solution pumped to the metals plant rose from
around 1.0g/l at the end of 2013 to 1.5-1.6g/l in February, allowing 45-55t of
nickel production on a daily basis at solution flow rates of around 1,400 m3/h
through the metals plant.
The old primary heaps 2 and 3 continued to suffer from the effects of excess
water and remained largely inactive. Consequently the decision was taken to
cease acid addition to these heaps until they are reclaimed and re-stacked on
the secondary leaching area.
The cost efficiency of production at the metals plant improved significantly as
a result of the higher metal grades in solution as well as the substantially
higher temperature of the leach solution compared to the winter of 2013. The
increased solution temperature, around 20°C this winter vs. 6°C the year before,
reflects the high level of chemical and biological activity in the new primary
heaps 1 and 4.
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.
Production key figures
---------------------+------+-----+-----+-----+------
| | Q1| Q4| Q1| FY
| | 2014| 2013| 2013| 2013
---------------------+------+-----+-----+-----+------
Mining | | | | |
---------------------+------+-----+-----+-----+------
Ore production |Mt | -| 1.6| -| 7.4
---------------------+------+-----+-----+-----+------
Waste production |Mt | -| 0.9| -| 3.1
---------------------+------+-----+-----+-----+------
Materials handling | | | | |
---------------------+------+-----+-----+-----+------
Stacked ore |Mt | -| 1.7| -| 7.6
---------------------+------+-----+-----+-----+------
Bioheapleaching | | | | |
---------------------+------+-----+-----+-----+------
Ore under leaching |Mt | 51.8| 51.8| 44.3| 51.8
---------------------+------+-----+-----+-----+------
Metals recovery | | | | |
---------------------+------+-----+-----+-----+------
Nickel metal content|Tonnes|3,068|1,559|2,732| 8,662
---------------------+------+-----+-----+-----+------
Zinc metal content |Tonnes|5,726|4,179|3,128|17,418
---------------------+------+-----+-----+-----+------
Sustainable development, safety and permitting
Safety
With respect to safety issues, Talvivaara's goal is a safe and healthy working
environment, and the Company continued to develop its safety culture based on
zero accident philosophy.
At the end of the first quarter, the injury frequency among the Talvivaara
personnel was 34.9 lost time injuries/million working hours on a rolling 12
month basis (31 March 2013: 15.7 lost time injuries/million working hours).
Environment
Talvivaara continues to focus on minimising the environmental impact of its
operations. Current primary focus is on water balance management and
purification and discharge of excess waters from the mine site.
During the first quarter of 2014, significant effort was made to ascertain
sufficient emergency volumes in ponds and dams ahead of the spring melt and in
case of any leakages. Particular focus was on the Kortelampi dam, from where
water was treated and released directly to the southern Vuoksi waterways as well
as through the Tammalampi water treatment unit to the northern Oulujoki water
system. Removal of excess water from the gypsum ponds also continued with the
target of having all excess water removed by the end of August 2014 (see also
Permitting).
Hydrogen sulphide (odour) emissions have been largely addressed. Odour
complaints from nearby residents reduced further from five in Q1 2013 to three
in Q1 2014. Notices of noise increased, however, from one to seven as a result
of an increased number of blowers used for the aeration of leaching heaps.
Talvivaara continues to place significant emphasis on timely and transparent
communication on environmental matters with the neighbouring communities and
other interested stakeholders. During the first quarter, a new text message
service targeted for nearby neighbours was implemented. Furthermore, the
Company's first ever Twitter question and answer session with Talvivaara's
sustainability experts was successfully held.
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. Among other regulations, the 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") of its
inability to comply with the interim deadline of January, however stating that
the Company believes the final emptying deadline for the entire pond to be
achievable. After this, the Kainuu ELY-Centre has requested section 5 of the
gypsum pond to be emptied of excess water and sufficient emergency volume to be
arranged in the Kortelampi dam for all waters contained in the gypsum pond by 1
April 2014. Talvivaara noted, in turn, to the ELY-Centre that the requested
timetable was not technically feasible and that a realistic deadline would
rather be 15 May 2014.
Subsequently the Kainuu ELY-Centre gave a ruling on 25 April 2014 stating that,
under a threat of a fine, Talvivaara would have to reduce the amount of water in
gypsum pond section 6 to below 500,000 cubic metres by 15 May 2014. As at 7 May
2014, the amount of water in the pond was measured to be approximately 407,000
cubic metres and in compliance with the requirement. Gypsum pond section 5 had
been emptied of excess water already in April. On 15 May 2014, Kainuu ELY-Centre
confirmed the removal of the threat of a fine.
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. During the first quarter of 2014,
preliminary discussions with the Ministry of Employment and the Economy were
held to prepare for the re-application.
Business development and commercial arrangements
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.
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 variations in currency exchange ratios. Nickel
sales currently represent close to 90% of the Company's revenues and variations
in the nickel price therefore have a direct and significant effect on
Talvivaara's financial result and economic viability. Talvivaara is, since
February 2010, unhedged against variations in metal prices. Full or
substantially full exposure to nickel prices is in line with Talvivaara's
strategy and supported by the Company's view that it can operate the Talvivaara
mine, once it has been fully ramped up, profitably also during the lows of
commodity price cycles.
Talvivaara's revenues are almost entirely in US dollars, whilst the majority of
the Company's costs are incurred in Euro. Potential strengthening of the Euro
against the US dollar could thus have a material adverse effect on the business
and financial condition of the Company. Talvivaara hedges its exposure to the US
dollar on a case by case basis with the aim of limiting the adverse effects of
US dollar weakness as considered justified from time to time.
Personnel and management
Wages and salaries
The number of personnel employed by the Group on 31 March 2014 was 516 (Q1
2013: 583).
Wages and salaries paid during the three months to 31 March 2014 totalled EUR
5.1 million (Q1 2013: EUR 4.2 million).
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 31 March 2014 2014, 97 employees were 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.
Management changes
Lassi Lammassaari, M.Sc. (Environmental Engineering) was appointed Chief
Corporate Development Officer as of 27 February 2014. He leads 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.
Shares and shareholders
The number of shares issued and outstanding and registered on the Euroclear
Shareholder Register as of 31 March 2014 was 1,906,167,480. Including the effect
of the EUR 225 million convertible bond of 16 December 2010 and the stock
options of 2007 and 2011, the authorised full number of shares of the Company
amounted to 2,041,901,379.
After the adjustments to the terms and conditions of the 2007 stock options in
April 2013 as a consequence of the Company's rights issue, 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 between 1 January and 31 March 2014. A total of 16,289,000
stock option rights 2007C remained unexercised following the end of the
subscription period and expired.
Of the stock options of 2011, option rights 2011A and 2011B have expired due to
the agreed implementation criteria having not been met. Option rights 2011C have
not been allocated.
As at 31 March 2014, the shareholders who held more than 5% of the shares and
votes of Talvivaara were Solidium Oy (16.7%) and Pekka Perä (6.5%).
Legal proceedings
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.
Kainuu ELY Centre prohibited on 5 March 2014 Talvivaara Sotkamo to discharge
raffinate or secondary leach solution into the open pit and issued a threat of
an administrative penalty of 150,000 euros to enforce its decision. Due to the
improved water balance situation Talvivaara Sotkamo no longer has any need to
discharge untreated solutions into the open pit.
In addition, as at the date of these interim results, 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.
Events after the review period
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 an over EUR 50 million additional financing impact for the Company at
current zinc prices.
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
interim results, Talvivaara has drawn down EUR 6.7 million of the Nyrstar loan
facility.
Corporate reorganisation
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.
On 21 May 2014 the District Court of Espoo granted an extension to the deadlines
for submitting the proposals for the respective reorganisation programmes of the
Company Talvivaara Sotkamo until 30 September 2014. According to the prior
District Court ruling, the proposals for the reorganisation programmes were to
be submitted by 28 May 2014.
The Administrator and Talvivaara are engaged in discussions with potential
financing and industrial partners for a long-term financing solution for the
Talvivaara Group. Certain industrial and financial arrangements for the
continuation of operations of the Company and Talvivaara Sotkamo have already
been reached so that the restructuring programmes can be set up. The extension
was applied for as submission of the restructuring programme proposals is not
considered feasible until sufficient long-term financing has been secured.
Environmental permit decision
Talvivaara Sotkamo was granted an environmental permit decision relating to its
whole operation and uranium recovery by the Northern Finland Regional State
Administrative Agency on 30 April 2014. Talvivaara has assessed the decision and
will appeal against several parts of the decision, including amongst other
things the method of assessment of the securities to be set as well as some
other permit conditions which are deemed to be against the prevailing permitting
practice. The permit decision will only be applicable when the appeal processes
have been completed and Talvivaara will operate under the previously obtained,
existing permits until the new permit is final.
Production update
Talvivaara's year-to-date production through 26 May 2014 has reached 5,053t of
nickel and 9,592t of zinc. Metals production has continued stable with good
leaching performance from the two new heaps and high availability of the metals
plant. However, during the second quarter, nickel grade in leach solution has
declined slightly to a level of 1.2-1.3g/l due to continued heavy depletion from
the two new heaps.
Mining and materials handling processes have been suspended since November
2013. Since mid-May 2014, preparatory work has been undertaken to re-commence
reclaiming of old primary heaps, and as at the date of these interim results,
reclaiming is ongoing on a trial basis. However, more funding needs to be
secured before commitment to full scale reclaiming can be made or the mining of
new ore re-started.
Short-term outlook
Market outlook
The LME nickel price has shown an approximately 40% recovery since the
implementation of the Indonesian nickel ore export ban in January 2014, moving
from levels below USD 14,000/t to around USD 19,500/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 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. The key operational priority of the Company has
been 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 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 recent increase in nickel
price and the loan agreement with Nyrstar have allowed Talvivaara to re-start
reclaiming on a trial basis during the latter half of May. However, further
funding will need to be secured before commitment to full scale reclaiming can
be made. Similarly subject to financing, the Company plans to re-start mining of
new ore during the summer or early autumn.
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 2013. Furthermore, the metals plant is currently
operating uneventfully.
28 May 2014
Talvivaara Mining Company Plc.
Board of Directors
CONSOLIDATED INCOME STATEMENT
(Applications for corporate reorganisation proceeding filed on 15 Nov 2013)
Unaudited three Unaudited three
months to months to
(all amounts in EUR '000) 31 March 2014 31 March 2013
-----------------------------------------------
Net sales 29,014 27,605
Other operating income 547 729
Changes in inventories of
finished goods and work in
progress (1,185) 7,288
Impairment charges on
inventories - -
Materials and services (14,896) (22,614)
Personnel expenses (6,188) (7,285)
Depreciation and amortization (6,032) (13,099)
Impairment charges on PPE - -
Other operating expenses (8,353) (12,612)
-----------------------------------------------
Operating loss (7,092) (19,988)
Finance income 169 339
Finance cost (10,195) (12,080)
-----------------------------------------------
Finance income (cost) (net) (10,026) (11,741)
Loss before income tax (17,118) (31,729)
Income tax expense - 7,797
-----------------------------------------------
Loss for the period (17,118) (23,932)
-----------------------------------------------
Attributable to:
Owners of the parent (14,570) (21,005)
Non-controlling interest (2,549) (2,927)
-----------------------------------------------
(17,118) (23,932)
-----------------------------------------------
Earnings per share for profit (loss) attributable to the owners of the parent
(expressed in EUR per share)
Basic and diluted (0.01) (0.07)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Applications for corporate reorganisation proceeding filed on 15 Nov 2013)
Unaudited Unaudited three three
months to months to
(all amounts in EUR '000) 31 Mar 14 31 Mar 13
---------------------
Loss for the period (17,118) (23,932)
Other comprehensive income, net of tax - -
---------------------
Total comprehensive income (17,118) (23,932)
---------------------
Attributable to:
Owners of the parent (14,570) (21,005)
Non-controlling interest (2,549) (2,927)
---------------------
(17,118) (23,932)
---------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Applications for corporate reorganisation proceeding filed on 15 Nov 2013)
Unaudited Audited
(all amounts in EUR '000) 31 Mar 14 31 Dec 13
ASSETS
Non-current assets
Property, plant and equipment 300,485 304,956
Biological assets 6,488 6,641
Intangible assets 6,520 6,582
Investments in associates 6,968 6,968
Other receivables 8,267 8,412
Available-for-sale financial assets 2 2
328,729 333,560
Current assets
Inventories 259,816 261,451
Trade receivables 16,327 10,389
Other receivables 4,723 12,047
Cash and cash equivalent 1,070 5,867
281,937 289,754
Total assets 610,666 623,314
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 80 80
Share premium 8,086 8,086
Other reserves 764,626 764,603
Retained deficit (940,423) (925,854)
(167,631) (153,085)
Non-controlling interest in equity (136,927) (134,378)
Total equity (304,558) (287,463)
Non-current liabilities
Borrowings 15,264 30,592
Advance payments 270,641 270,641
Other payables 11 270
Provisions 10,891 10,785
296,807 312,288
Current liabilities
Borrowings 537,875 524,011
Advance payments 15,456 15,456
Trade payables 32,376 37,426
Other payables 32,710 19,065
Provisions - 2,531
618,418 598,489
Total liabilities 915,224 910,777
Total equity and liabilities 610,666 623,314
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Applications for corporate reorganisation proceeding filed on 15 Nov 2013)
A.Share capital
B. Share issue
C. Share premium
D. Invested unrestricted equity
E. Other reserves
F. Retained deficit
G. Total
H Non-controlling interest
I. Total equity
(all amounts in A B C D E F G H I
EUR '000)
1 Jan 2013 304, 1, 306,
80 - 8,086 490,749 48,810 (242,962) 763 989 752
Loss for the period (21, (2, (23,
- - - - - (21,005) 005) 927) 932)
------------------------------------------------------------
Total comprehensive
income for the (21, (2, (23,
period - - - - - (21,005) 005) 927) 932)
Transactions with
owners
Perpetual capital
loan - - - - 2,612 (1,851) 761 - 761
49, 49,
Rights issue - 49,463 - - - - 463 - 463
Incentive
arrangement for
Executive
Management - - - - 23 - 23 - 23
Employee share
option scheme
- value of employee
services - - - - 61 - 61 - 61
------------------------------------------------------------
Total contribution
by and distribution 50, 50,
to owners - 49,463 - - 2,696 (1,851) 308 - 308
Total transactions 50, 50,
with owners - 49,463 - - 2,696 (1,851) 308 - 308
------------------------------------------------------------
31 Mar 13 334, 333,
80 49,463 8,086 490,749 51,506 (265,818) 066 (938) 128
------------------------------------------------------------
31 Dec 13 (153, (134, (287,
80 - 8,086 741,576 23,028 (925,854) 085) 378) 463)
------------------------------------------------------------
1 Jan 14 (153, (134, (287,
80 - 8,086 741,576 23,028 (925,854) 085) 378) 463)
Loss for the period (14, (2, (17,
- - - - - (14,570) 570) 549) 118)
------------------------------------------------------------
Total comprehensive
income for the (14, (2, (17,
period - - - - - (14,570) 570) 549) 118)
Transactions with
owners
Incentive
arrangement for
Executive
Management - - - - 23 - 23 - 23
Total contribution
by and distribution
to owners - - - - 23 - 23 - 23
Total transactions
with owners - - - - 23 - 23 - 23
------------------------------------------------------------
31 Mar 14 (167, (136, (304,
80 - 8,086 741,576 23,051 (940,423) 631) 927) 558)
------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
(Applications for corporate reorganisation proceeding filed on 15
Nov 2013)
Unaudited Unaudited
three three
months to months to
(all amounts in EUR '000) 31 Mar 14 31 Mar 2013
------------------------------------
Cash flows from operating activities
Loss for the period (17,118) (23,932)
Adjustments for
Tax - (7,797)
Depreciation and amortization 6,032 13,099
Impairment charges on PPE - -
Impairment charges on inventories - -
Other adjustments 861 (6,758)
Interest income (169) (339)
Interest expense 10,195 12,080
------------------------------------
(199) (13,647)
Change in working capital
Decrease(+)/increase(-) in other receivables 1,527 8,291
Decrease (+)/increase (-) in inventories 322 (8,702)
Decrease(-)/increase(+) in trade and other
payables (2,116) (4,305)
------------------------------------
Change in working capital (267) (4,716)
------------------------------------
(466) (18,363)
Interest and other finance cost paid (409) (789)
Interest and other finance income 12 213
------------------------------------
Net cash used in operating activities (863) (18,939)
Cash flows from investing activities
Investments in associates - (486)
Purchases of property, plant and equipment (1,471) (17,085)
Purchases of biological assets - (52)
Purchases of intangible assets (29) (176)
Proceeds from sale of biological assets 644 92
------------------------------------
Net cash used in investing activities (856) (17,707)
Cash flows from financing activities
Proceeds from share issue net of
transactions costs - 54,035
Related party investment in Talvivaara
shares - -
Proceeds from advance payments - 19,480
Payment of interest-bearing liabilities (1,366) (1,317)
Payment of financial leasing liabilities (1,712) (2,919)
------------------------------------
Net cash generated from financing activities (3,078) 69,279
Net increase (decrease) in cash and cash
equivalents (4,797) 32,633
Cash and cash equivalents at beginning of
the period 5,867 36,058
------------------------------------
Cash and cash equivalents at end of the
period 1,070 68,691
------------------------------------
NOTES
1. Basis of preparation
This interim 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 2013.
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 14 407,003 105,154 294,482 242,147 1,048,786
Additions 77 1,395 - - 1,472
----------------------------------------------------
Gross carrying amount at 31
Mar 14 407,080 106,549 294,482 242,147 1,050,258
----------------------------------------------------
Accumulated depreciation and
impairment losses at 1 Jan
14 293,759 67,305 204,757 178,010 743,831
Depreciation for the period 3,911 - 1,200 831 5,942
----------------------------------------------------
Accumulated depreciation and
impairment losses at 31 Mar
14 297,670 67,305 205,957 178,841 749,773
----------------------------------------------------
Carrying amount at 1 Jan 14 113,244 37,849 89,725 64,137 304,955
----------------------------------------------------
Carrying amount at 31 Mar 14 109,410 39,244 88,525 63,306 300,485
----------------------------------------------------
3. Trade receivables
(all amounts in EUR '000)
As at As at
31 Mar 14 31 Dec 13
-------------------------------------------------
Nickel-Cobalt sulphide 15,952 9,977
Zinc sulphide 375 375
Copper sulphide - 37
-------------------------------------------------
Total trade receivables 16,327 10,389
-------------------------------------------------
4. Inventories
(all amounts in EUR '000)
As at 31 March 2014 As at 31 Dec 2013
--------------------------------------------
Raw materials and consumables 24,350 24,800
Work in progress 231,625 234,193
Finished products 3,841 2,457
--------------------------------------------
Total inventories 259,816 261,451
--------------------------------------------
5. Borrowings
(all amounts in EUR '000)
As at As at
Non-current 31 Ma 14 31 Dec 13
-------------------
Finance lease liabilities 15,264 17,000
Other - 13,593
-------------------
15,264 30,592
-------------------
Current
Capital loans 1,405 1,405
Perpetual capital loan 35,106 35,106
Investment and Working Capital loan 57,855 57,855
Finance lease liabilities 7,052 7,032
Revolving Credit Facility 70,000 70,000
Senior Unsecured Bonds due 2017 110,000 110,000
Senior Unsecured Convertible Bonds due 2015 244,230 242,613
Other 12,227 -
-------------------
537,875 524,011
-------------------
Total borrowings 553,139 554,603
-------------------
6. Advance payments
(all amounts in EUR '000)
As at As at
Non-current 31 Mar 14 31 Dec 13
--------------------
Deferred zinc sales revenue 216,713 216,713
Deferred uranium sales revenue 53,928 53,928
--------------------
270,641 270,641
--------------------
Current
Deferred zinc sales revenue 15,456 15,456
--------------------
15,456 15,456
--------------------
Total advance payments 286,097 286,097
--------------------
7. Provisions
Gypsum Water
pond balance Environmental Mining
leakage management restoration fee Total
-------------------------------------------------------
31 Dec 13 3,775 2,531 6,849 162 13,316
-------------------------------------------------------
Charged/(credited) to the
income statement:
Additional provisions - - 106 8 114
Unwinding of discount - - 1 - 1
Used during the period (2,531) - - (2,531)
-------------------------------------------------------
31 Dec 14 3,775 - 6,956 170 10,901
-------------------------------------------------------
The non-current and current portions of provisions are as
follows:
As at As at
31 Mar 14 31 Dec 3
--------------------------
Non-current
Gypsum pond leakage 3,775 3,775
Environmental restoration 6,956 6,849
Mining fee 170 161
--------------------------
10,901 10,785
Current
Water balance management - 2,531
--------------------------
- 2,531
--------------------------
Total 10,901 13,316
--------------------------
8. Changes in the number of shares issued
Number
of shares
---------------------------------
31 Dec 13 1,906,167,480
Changes -
---------------------------------
31 Dec 14 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 As at
31 Mar 14 31 Dec 13
-----------------------------------
Not later than 1 year 1,812 1,812
Later than 1 year and not later
than 5 years 549 552
Later than 5 years 25 29
-----------------------------------
2,386 2,393
Capital commitments
At 31 March 2014, the Group had capital commitments amounting to EUR 0.8 million
(31 December 2013: EUR 1.2 million) principally relating to the completion of
the Talvivaara mine, improving the reliability and expansion of production
capacity. These commitments are for the acquisition of new property, plant and
equipment.
Talvivaara Mining Company Plc
Key financial figures of the Group Three Three Twelve
months to months to months to
31 Mar 14 31 Mar 13 31 Dec 13
-------------------------------
Net sales EUR '000 29,014 27,605 77,572
Operating loss EUR '000 (7,092) (19,988) (701,801)
Operating loss percentage -24.4 % -72.4 % -904.7 %
Loss before tax EUR '000 (17,118) (31,729) (758,043)
Loss for the period EUR '000 (17,118) (23,932) (812,447)
Return on equity - -7.5 % -12.9 %
Equity-to-assets ratio -49.9 % 25.5 % -46.1 %
Net interest-bearing debt EUR '000 552,069 530,063 548,736
Debt-to-equity ratio -181.3 % 159.1 % -190.9 %
Return on investment -2.7 % -1.3 % -1.2 %
Capital expenditure EUR '000 1,471 17,313 60,535
Property, plant and equipment EUR '000 300,485 813,604 304,956
Borrowings EUR '000 553,139 598,754 554,603
Cash and cash equivalents at
the end of the period EUR '000 1,070 68,691 5,867
Share-related key figures
Three Three Twelve
months to months to months to
31 Mar 14 31 Mar 13 31 Dec 13
----------------------------------------
Earnings per share EUR (0.01) (0.09) (0.48)
Equity per share(1) EUR -0.09 1.00 -0.19
Development of share price
at London Stock Exchange
Average trading price(2) EUR 0.06 0.53 0.12
GBP 0.05 0.45 0.10
Lowest trading price(2) EUR 0.04 0.21 0.30
GBP 0.03 0.18 0.30
Highest trading price(2) EUR 0.08 1.33 1.34
GBP 0.07 1.14 1.14
Trading price at the end of
the period(3) EUR 0.04 0.25 0.08
GBP 0.04 0.21 0.07
Change during the period -45.0 % -79.7 % -93.2 %
Price-earnings ratio neg. neg. neg.
Market capitalization at the
end of the period(4) EUR '000 84,928 66,821 159,759
GBP '000 70,338 56,504 133,622
Development in trading
volume
Trading volume 1000 shares 87,344 42,435 776,597
In relation to weighted
average number of shares 4.6 % 15.6 % 54.2 %
Development of share price
at OMX Helsinki
Average trading price EUR 0.06 0.63 0.11
Lowest trading price EUR 0.04 0.22 0.03
Highest trading price EUR 0.08 1.39 1.39
Trading price at the end of
the period EUR 0.04 0.23 0.08
Change during the period -42.8 % -81.7 % -93.9 %
Price-earnings ratio neg. neg. neg.
Market capitalization at the
end of the period EUR '000 82,918 61,814 145,059
Development in trading
volume
Trading volume 1000 shares 273,786 113,082 3,086,423
In relation to weighted
average number of shares 14.4 % 41.5 % 215.6 %
Adjusted average number of
shares 1,906,167,480 272,309,640 1,431,677,258
Fully diluted average number
of shares 1,903,899,480 271,205,640 1,530,295,193
Number of shares at the end
of the period 1,906,167,480 272,309,640 1,906,167,480
(1)) The funds entered into share issue reserve are not included in the
calculation.
(2)) Trading price is calculated on the average of EUR/GBP exchange rates
published by the European Central Bank during the period.
(3)) Trading price is calculated on the EUR/GBP exchange rate published by the
European Central Bank at the end of the period.
(4)) Market capitalization is calculated on the EUR/GBP exchange rate published
by the European Central Bank at the end of the period.
Employee-related key figures
Three Three Twelve
months to months to months to
31 Mar 14 31 Mar 13 31 Dec 13
------------------------------
Wages and salaries EUR '000 5,092 4,204 23,274
Average number of employees 523 586 603
Number of employees at the
end of the period 516 583 549
Other figures
Three Three Twelve
months to months to months to
31 Mar 14 31 Mar 13 31 Dec 13
-------------------------------
Share options outstanding at
the end of the period - 16,289,000 5,958,837
Number of shares to be issued
against the outstanding share options - 16,289,000 5,958,837
Rights to vote of shares to be issued
against the outstanding share options - 0.8 % 2.1 %
Talvivaara Mining Company Plc
Key financial figures of the Group
Return on equity Profit (loss) for the period
-------------------------------------------------------
(Total equity at the beginning of period + Total
equity at the end of period)/2
Equity-to-assets ratio Total equity
-------------------------------------------------------
Total assets
Net interest-bearing debt Interest-bearing debt - Cash and cash equivalent
Debt-to-equity ratio Net interest-bearing debt
-------------------------------------------------------
Total equity
Return on investment Profit (loss) for the period + Finance cost
-------------------------------------------------------
(Total equity at the beginning of period + Total
equity at the end of period)/2 +
(Borrowings at the beginning of period + Borrowings at
the end of period)/2
Share-related key figures
Profit (loss) attributable to equity holders of the
Earnings per share Company
-------------------------------------------------------
Adjusted average number of shares
Equity per share Equity attributable to equity holders of the Company
-------------------------------------------------------
Adjusted average number of shares
Price-earnings ratio Trading price at the end of the period
-------------------------------------------------------
Earnings per share
Number of shares at the end of the period * trading
Market capitalization at price at the end of the
the end of the period period
[HUG#1789013]
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