2009-08-27 08:00:58 CEST
2009-08-27 08:02:30 CEST
REGULATED INFORMATION
Talvivaaran Kaivososakeyhtiö Oyj - Interim report (Q1 and Q3)
Talvivaara Mining Company Plc Half Interim Report January-June 2009
Stock Exchange Release 27 August 2009
Talvivaara Mining Company Plc ("Talvivaara" or the "Company") today
announces its unaudited Interim Results for the three and six month
periods ended 30 June 2009.
Highlights
* Decision to expand production capacity to up to 50,000
tonnes of nickel annually in 2012 was taken funded by a successful
equity placing announced in June 2009
* Talvivaara's crushing circuit is being upgraded to
increase the crushing capacity to approximately 22 million tonnes
per annum; installation of the redesigned and expanded circuit is
progressing as planned and on time for commissioning in the
beginning of September 2009
* Due to previously announced technical problems in
materials handling, the crushing capacity of the old circuit
remained substantially below budgeted levels throughout the period,
primarily due to significant down-time
* Excluding crushing, all other processes were running as
designed
* Successful nickel and zinc sulphide production campaigns
were run in January-February and April-May 2009 with subsequent
deliveries to Norilsk Nickel Harjavalta Oy and zinc customers
* Talvivaara obtained a secondary listing of its shares on
the Helsinki Stock Exchange (Nasdaq OMX Helsinki Ltd.) on 11 May
2009, which has increased liquidity of the shares and expanded the
shareholder base substantially
* Safety at the mine site remained good with three Lost Time
Injuries (LTI's) to Talvivaara personnel during the period; there
have been no LTI's to the Company's employees since the launch of
the Work Group Safety Challenge at the beginning of February 2009
* The number of employees at Talvivaara increased from 239
at the end of 2008 to 276 on 30 June 2009; recruitment will
continue throughout the ramp-up period during the remainder of the
year
* Financial results for the six month period reflected the
commencement of product deliveries to customers, but capacity was
limited due to technical problems in crushing
- Sales EUR 1.8 million
- Other operating income mainly from currency and metal
derivatives EUR 25.6 million
- Operating loss EUR 7.9 million
* Talvivaara's cash position was improved during the period
through
- EUR 45 million investment and working capital loan from
Finnvera; and
- Equity placing of approximately 22.3 million shares with
gross proceeds of EUR 82.7 million[1] (GBP 71.3 million), as
announced in June and completed in July 2009
1. At EUR/GBP exchange rate of 0.8612 on 6 July 2009, as applied to
73% of the issue which was subscribed and paid in GBP.
Key Figures Q2 Q2 Q1-Q2 Q1-Q2
2009 2008 2009 2008 FY 2008
EUR
Turnover '000 1,652 - 1,778 - -
Operating profit EUR
(loss) '000 (10,128) (3,223) (7,905) (4,621) (4,296)
Profit (loss) EUR
before taxes '000 (2,867) (2,629) (14,689) (4,451) (8,033)
Earnings per share EUR (0.01) (0.01) (0.04) (0,02) 0.03
EUR
Capital expenditure '000 28,020 105,012 57,737 172,902 429,086
Net interest-bearing EUR
debt '000 397,417 (21,602) 397,417 (21,602) 285,466
Debt-to-equity ratio 108.4% -6.5% 108.4% -6.5% 67.3%
Cash and cash
equivalents at the EUR
end of the period '000 24259 74,117 24259 74117 82,713
Derivative financial EUR
instruments '000 97,783 29,071 97,783 29,071 152,545
Number of employees
at the end of the
period 276 191 276 191 239
Pekka Perä, CEO of Talvivaara commented: "I am delighted to be able
to look back on a positive half year for Talvivaara as we progress
towards full production. We have decided to accelerate our growth by
increasing production capacity by almost 50% to up to 50,000 tonnes
of nickel per annum from 2012. In the meantime, we are addressing the
design problems experienced with our existing crushing circuit and
anticipate the upgraded facilities to be commissioned and operational
in September.
The past six months have seen our financial position strengthen and
our shareholder base deepen and broaden through our successful EUR
82.7million equity placing in July and, respectively, our secondary
listing on the Helsinki Stock Exchange in May. In conjunction with
the hard work of our operational and managerial team, we are
confident that these developments put us in a position to achieve our
production target of approximately 30,000 tonnes of nickel in 2010
and to continue growing Talvivaara into an internationally
significant nickel producer."
Enquiries:
Talvivaara Mining Company Plc Tel. +358 20 712 9800
Pekka Perä, CEO
Saila Miettinen-Lähde, CFO
Merlin Tel. +44 20 7653 6620
Tom Randell
Anca Spiridon
An analyst presentation will be webcast at 11.00 UK time/ 13.00
Finnish time on 27 August 2009 and will be available on the
Talvivaara website, www.talvivaara.com. The webcast is also
accessible directly via the link below.
Link to webcast:
http://qsb.webcast.fi/c/customers/customers_2009_0827_talvivaara_H1/
A conference call facility will be available for a Q&A with senior
management following the presentation via the following numbers:
Europe & U.K Participants: +44 (0)20 7162 0025
US Participants: +1 334 323 6201
Conference ID: 844147
CEO Statement
Our focus over the last six months has been to achieve the ramp up of
production to our targeted figures promptly and efficiently despite
the previously announced teething problems with our crushing circuit.
It is reassuring that all other stages of the production process,
including metals recovery, are working well. Corrective action in the
crushing process is progressing as planned and we look forward to
being able to confirm successful installation and commissioning of
the redesigned and expanded crushing circuit in September, as
planned.
Based on our experience from Talvivaara operations so far and
following the successful equity placing carried out this summer, I am
pleased to update on positive progress so far with our plan to
increase our production capacity to up to 50,000 tonnes of nickel
annually from 2012. After the closing of the equity placing we
started the investment programme related to the production expansion
by ordering critical long-lead items such as the second hydrogen
plant and additional mobile equipment.
We have put a lot of emphasis on environmental, health and safety
issues, and we are all very proud of our record of zero Lost Time
Injuries to Talvivaara personnel since we launched our Work Group
Safety Challenge in February. On the environmental side, our
performance was also good and we have no material concerns. We intend
to maintain our good record on the environment and on occupational
health and safety.
The commodities markets have shown some signs of improvement mainly
on re-stocking, but an underlying increase in demand is still
awaited. We would not be surprised to see commodities prices retract
somewhat from their present levels in the short term, but our long
term view is very positive. The latest economic data from the
developing economies has only strengthened this view. In any
foreseeable pricing environment, as a low cost producer, Talvivaara
is in a strong position.
On the equity markets, the liquidity of the Talvivaara shares has
improved, and our shareholder base, as listed in the Finnish Central
Share Depository, broadened from approximately 700 shareholders just
prior to our secondary listing on the Helsinki Stock Exchange in May
to some 11,500 by the end of June and to over 13,000 in late August.
We are very pleased with this development, which demonstrates
increasing interest and support from our Finnish retail and
institutional investors and which complements our already strong
international shareholder base. We would also like to thank our
shareholders for their continued support in our recent equity
placing, showing their appreciation for our achievements in bringing
the Talvivaara mine to production and their support of our commitment
to taking it to the next level.
Pekka Perä
CEO
Financial review
Talvivaara's sales during the three and six month periods ended 30
June 2009 amounted to EUR 1.7 million (Q2 2008: nil) and EUR 1.8
million (Q1-Q2 2008: nil), respectively, reflecting the start of
metal sulphide deliveries from the Talvivaara mine to customers. The
sales volumes remained below budgeted levels due to limited crushing
capacity resulting from technical design issues with the crushing
circuit.
The Company's other operating income, amounting to EUR 6.3 million in
Q2 2009 (Q2 2008: EUR 4.3 million) and EUR 25.6 million for Q1-Q2
2009 (Q1-Q2 2008: EUR 9.2 million), consisted mainly of realised (EUR
12.2 million) and unrealised (EUR 13.2 million) gains on nickel, zinc
and USD forwards. Other operating expenses, which in Q2 2009 amounted
to EUR (9.4) million (Q2 2008: EUR (3.8) million) and in Q1-Q2 2009
to EUR (15.5) million (Q1-Q2 2008: EUR (7.9) million), included
unrealised fair value losses on biological assets (trees) and nickel
and zinc forward swaps held for trading.
Employee benefit expenses including the value of employee expenses
related to the employee share option scheme of 2007 were EUR (4.3)
million in Q2 2009 (Q2 2008: EUR (2.6) million) and EUR (8.1) million
for the first six months of the year (Q1-Q2 2008: EUR (4.1) million).
The increase was attributable to increase in the number of
employees.
Operating loss for Q2 2009 amounted to EUR (10.1) million (Q2 2008:
EUR (3.2) million) and was EUR (7.9) million for the first half of
the year (Q1-Q2 2008: EUR (4.6) million).
Finance income in Q2 2009 of EUR 14.5 million (Q2 2008: EUR 2.0
million) and in Q1-Q2 2009 of EUR 7.0 million (Q1-Q2 2008: EUR 2.3
million) included exchange rate gains on the USD 320 million project
loan facility and on bank accounts. Finance costs of EUR (7.2)
million in Q2 2009 (Q2 2008: EUR (1.4) million) and EUR (13.8)
million in Q1-Q2 2009 (Q1-Q2 2008: EUR (2.1) million related mostly
to the Company's borrowings, in particular to the project loan
facility and the EUR 84.9 million convertible bond.
Loss for the period in Q2 2009 amounted to EUR (2.4) million (Q2
2008: EUR (4.0) million) and totalled EUR (11.2) million for the
first half of the year (Q1-Q2 2008: EUR (6.0) million).
The Company's total comprehensive income in Q2 2009 was EUR (56.9)
million (Q2 2008: EUR 9.5 million) and in Q1-Q2 2009 EUR (58.6)
million (Q1-Q2 2008: EUR 3.9 million), reflecting primarily a
decrease in hedge reserves brought about by the increase in nickel
price during the first half of the year.
In the consolidated statement of financial position as at 30 June
2009, property, plant and equipment totalled EUR 590.5 million (31
December 2008: EUR 552.5 million), with the increase since the year
end 2008 attributable to expenditure on and capitalisation of mine
related assets according to plan. Other notable changes in the
Company's assets include the substantial decrease in the fair value
of derivative financial instruments, in particular nickel and zinc
forward swaps, brought about by an increase in nickel and zinc prices
during the reporting period. As at 30 June 2009, the net value of
derivative financial instruments was EUR 97.8 million (31 December
2008: EUR 152.5 million).
Inventories amounted to EUR 66.5 million (31 December 2008: 31.7
million) with the increase relating mostly to ore on leach pads and
work in progress, both valued at cost. Cash and cash equivalents
totalled EUR 24.3 million (31 December 2008: EUR 82.7 million) at the
period end prior to receipt of the equity placing proceeds in July.
In equity and liabilities, the hedge reserve relating to nickel cash
flow hedges decreased from EUR 72.3 million on 31 December 2008 to
EUR 34.4 million on 30 June 2009 due to increase in the market price
of nickel. Borrowings increased from EUR 368.2 million to EUR 421.7
million, with the change primarily reflecting draw down of the EUR 45
million investment and working capital loan from Finnvera Plc.
Total equity and liabilities as at 30 June 2009 amounted to EUR 824.6
million (31 December 2008: EUR 874.0 million).
Currency and commodity hedges and hedge accounting
The Company entered into a currency hedging programme comprising USD
forwards for seven quarters from Q2 2009 through Q4 2010. The hedged
amount is EUR 175 million in total, with EUR 25 million maturing each
quarter. The forwards were executed in April 2009 at EUR/USD rates
ranging from 1.26 to 1.28.
In addition, the Company has outstanding currency option contracts
which at the end of the period amounted to USD 112 million. The
EUR/USD strike price of the option contracts is 1.60. The options
will mature during the second half of 2009.
As at 30 June 2009, the Company had 14,743 tonnes of nickel and
36,108 tonnes of zinc forward swaps remaining of its commodity
hedging programme executed in 2007 and 2008 and extending through
2011. The volume weighted average prices of the outstanding positions
are USD 23,561 per tonne for nickel and USD 1,949 per tonne for zinc.
Talvivaara applies hedge accounting to nickel hedges maturing in Q4
2009 - Q4 2011.
Financing
During the period, Talvivaara drew down EUR 45 million of the
investment and working capital loan granted by Finnvera Plc. The loan
is now fully drawn down as the remaining EUR 5 million of Finnvera's
total commitment of EUR 50 million is used for capitalisation of
interest. The loan carries an interest of EURIBOR 6 months + 3.00%
and is repaid over a five-year period of 2013 to 2018.
The Company drew down EUR 5.1 million of its term loan facility for
the railroad construction during the first half of the year. Of the
total committed facility of EUR 45 million, EUR 30.8 million had been
drawn as at 30 June 2009.
The interest margin of Talvivaara's fully drawn project term loan of
USD 320 million was increased, effective as of 16 April 2009, to
3.25% pre-completion and will fall to 3.00% post-completion. The
economic completion that triggers the lower interest margin is
expected to take place during 2010.
The Company received a EUR 5 million reimbursement from the Finnish
Government for infrastructure investments relating to power supply
and electrification. The subsidy was part of the overall decision by
the Finnish Parliament in 2007 to grant EUR 52 million to support the
construction of necessary infrastructure to the Talvivaara mine.
On 2 June 2009 the Company announced an equity placing of 22,280,000
shares to institutional investors, representing approximately 10 per
cent of the existing issued share capital. The placing was
successfully conducted through an accelerated book-building process
and priced at EUR 3.70 (GBP 3.20) per share, raising gross proceeds
of EUR 82.7 million (GBP 71.3 million). At the end of the reporting
period, the completion of the share issue was subject to shareholder
approval which was subsequently received at the Extraordinary General
Meeting held on 6 July 2009.
Production summary
Talvivaara produced its first saleable quantities of nickel and zinc
sulphides in February 2009, followed by a second metals recovery
campaign in May 2009. The production volumes remained substantially
below budgeted levels, however, due to limited amounts of leach
solution available for treatment. This was caused by technical
problems in crushing, which in turn limited the amount of ore under
leaching.
The mining department blasted 5.3 million tonnes of ore and excavated
1.8 million tonnes of waste during the first half of the year. The
mining operations performed well, however not at full capacity due to
the bottleneck in crushing.
Design flaws in the fine crushing circuit continued to cause
significant downtime such that the overall capacity achieved Q1-Q2
2009 was limited to 4.0 million tonnes of ore, which was 53% of the
previously budgeted amount. Temporary improvements in capacity were
achieved as a result of a series of amendments, but production levels
of the circuit could not be consistently improved. During Q2 2009 the
downtime was partly related to preparations for the installation of
the expanded crushing circuit in August.
In order to secure sufficient capacity in the long term and to catch
up on the already incurred crushing delay, the Company decided to
redesign the entire system and to acquire additional crushing
equipment with expected availability for use in September 2009. By
the end of June 2009, construction of the new crushing plant, which
is planned to increase the capacity from 15 million tonnes to
approximately 22 million tonnes annually, was well on its way and a
2-3 week production stoppage for installation is being carried out
during August.
The Company's primary crusher also experienced technical problems and
performed at less than budgeted capacity during the period.
Corrective action was taken during the second quarter, as soon as the
capacity limitations became obvious. Problems in primary crushing are
not a rate limiting factor for overall production, however, as
contractor capacity is readily available.
Bioheapleaching proceeded according to plan with the existing heap
supporting the metals recovery levels realised in the May production
campaign. Heat generation in the heap has continued to be high,
making temperature control through aeration and irrigation a critical
task especially during the summer months.
The metals recovery process was in operation for most of the month of
May, producing approximately 12-14 tonnes of nickel and 29-30 tonnes
of zinc per day. The produced volumes correspond well to the size and
average age of the heap at the time. The total nickel and zinc
contents in the Q1-Q2 2009 production were 224 tonnes and 538 tonnes,
respectively. The quality of the products was good and continued to
improve throughout the production campaign with increasing experience
of the metals recovery process.
At the end of Q2 2009, the Company estimates production ramp-up
overall to be delayed approximately 5 months from the original
ramp-up plan.
Due to the disproportionally high cost of materials handling relative
to metals recovery during the first half of 2009, the unit cost of
production during the period was not representative of the estimated
production costs in steady state operation.
Production summary 2008 - Q2 2009
Q2 Q1 Q1-Q2 2008-09
2009 2009 2009
Mining
Blasted ore million tonnes 2.4 2.9 5.3 8.3
Excavated waste million tonnes 0.9 1.0 1.8 3.2
Materials handling
Stacked ore million tonnes 2.1 2.0 4.0 6.5
Bioheapleaching
Ore in primary heap
at end of period million tonnes 6.5 4.4 6.5 6.5
Metals recovery
Nickel sulphide production dry metric tonnes 402 58 460 460
Nickel metal content tonnes 198 26 224 224
Zinc sulphide production dry metric tonnes 794 460 1,254 1,254
Zinc metal content tonnes 538 168 706 706
Research and development
Talvivaara continued active studies relating to manganese recovery
from the leach solution. Other ongoing research and development
projects related to optimisation of the bioheapleaching technology,
chemical and biological iron removal from leach solution, and
utilisation of gypsum residue.
Environment, health and safety
The Company continued its environmental management and monitoring
programme in accordance with the requirements set out in its
Environmental Permit. Some temporarily decreased pH levels and
increases in suspended solids and metal contents in downstream waters
have been detected and such deviations have been reported to the
environmental authorities. Any deviations have been followed by
increased level of monitoring until all parameters have returned to
permitted levels.
Dust emissions from the mining area have also occasionally exceeded
permitted levels, primarily due to contractor fine crushing which was
performed outdoors during the early part of 2009 to increase the
overall crushing capacity. Since the discontinuation of contractor
fine crushing at the end of March the dust emissions have
substantially decreased, but the Company continues to focus on
decreasing the dust levels further.
Talvivaara is in the process of preparing its environmental processes
to meet the ISO 14001 environmental standard. Audit of the
environmental system is targeted for Q4 2010.
No environmental compensations were paid during the reporting period.
The environmental security placed for future rehabilitation of the
area amounted to EUR 15.3 million on 30 June 2009. Of the total, EUR
9 million was covered by bank guarantees and guarantee insurance, and
EUR 6.3 million was deposited in escrow accounts.
Occupational safety is one of Talvivaara's key focus areas. The
safety record remained good during the reporting period with three
relatively minor Lost Time Injuries (LTI's) reported among the
Company's personnel in January 2009 and none since the start of the
Work Group Safety Challenge in February 2009. The overall safety
rating at the end of the period was 12 LTI's per million man hours.
Legal and permitting matters
The name of the Company's operating subsidiary was changed from
Talvivaara Project Ltd. to Talvivaara Sotkamo Ltd. The new company
name was registered in the Finnish Trade Registry on 16 June 2009.
The appeal pending at the Supreme Administrative Court against the
decision by the Ministry of Employment and Economy regarding the
extension of the area covered by the existing mining license was
cancelled in April. Thereby the extension of the mining license area
became final and binding on 14 April 2009. Concurrently, the appeal
against the compensations awarded in the land surveying and
redemption proceedings pending at the Land Court of Rovaniemi was
cancelled, making the compensation awards final and binding as of 16
April 2009.
Personnel
Talvivaara employed an average of 268 employees during the first half
of 2009 (Q1-Q2 2008: 133). At the end of June 2009 the number of
employees was 276, while the corresponding number was 239 at the end
of 2008 and 191 at the end of June 2008. Wages and salaries paid
during the period totalled EUR 6.9 million (Q1-Q2 2008: EUR 3.5
million).
Shares and shareholders
The issued share capital of the Company on 30 June 2009 was
222,896,718 and (assuming share issues in relation to the convertible
bond of May 2008 and option scheme of 2007) the fully diluted issued
share capital of the Company was 241,391,018. A further share issue
occurred in July 2009, post the period end, and is referred to below.
As at 30 June 2009, the shareholders who held more than 5% of the
shares and votes of the Company were Pekka Perä (25.6%), Varma Mutual
Pension Insurance Company (8.6%), Norilsk Nickel Holdings Ltd. (5.5%)
and Black Rock (5.1%).
Talvivaara obtained a secondary listing of its shares on the Helsinki
Stock Exchange (Nasdaq OMX Helsinki Ltd) on 11 May 2009.
Risks and uncertainties
Talvivaara carries out an ongoing process endorsed by the Board of
Directors to identify risks, measure their impact against certain
assumptions and implement the necessary proactive steps to manage
these risks. Talvivaara's operations are affected by various risks
common to the mining industry, such as risks relating to the
development of Talvivaara's mineral deposits, and volatility of
commodities prices and currency exchange ratios.
In the short term, Talvivaara's operational risks relate primarily to
the installation and commissioning of the redesigned and expanded
crushing circuit and the ramp-up schedule of the overall operations.
Because of uncertainties relating to the materials handling
processes, Talvivaara has previously withdrawn its production targets
for the current year and is taking measures to secure 2010 production
at the targeted level of approximately 30,000 tonnes of nickel.
The market price of nickel has recovered significantly over the past
3-4 months. In light of the available data particularly on industrial
demand of nickel in the Western economies, the recent price increase
may in the Company's view have exceeded the fundamental drivers and
may not be sustainable in the short term. For the short and medium
term, Talvivaara has executed significant hedges against low nickel
and zinc prices. In the long term, Talvivaara believes its operations
to also be profitable at substantially lower nickel prices than the
present market prices of USD 19,000-20,000 per tonne.
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's existing currency hedges have been executed
to partly mitigate this through the end of 2010 and the Company
anticipates hedging against currency exchange volatility also going
forward.
Events after the reporting period
Closing of the equity placing announced on 2 June 2009
An Extraordinary General Meeting of the Company Plc held on 6 July
2009 resolved to approve the proposal of the Board of Directors for a
share issue of 22,280,000 new shares on a non pre-emptive basis. The
new shares, which had been placed and allocated in an accelerated
book-building process on 2 June 2009, were registered in the Finnish
Trade Register on 7 July 2009 and dealings in the new shares on the
London Stock Exchange's main market and on the official list of the
Helsinki Stock Exchange commenced on 8 July 2009.
Production stoppage for installation of redesigned and expanded
crushing circuit
The production stoppage affecting all production processes except
bioheapleaching commenced on
12 August 2009 as planned. The installation work has since progressed
on or ahead of schedule and re-start of all processes, including
commissioning of the new crushing circuit, is expected in the
beginning of September.
Continued modification of primary crusher
Additional modifications to the primary crusher have been made since
end June 2009 and are anticipated to continue until mid Q4 2009 in
order to get the capacity of the system up to the specified level. In
the meantime, contractors are engaged to provide sufficient primary
crushing capacity to meet the fine crushing capacity of the expanded
circuit.
Capital expenditure related to capacity expansion
Critical long-lead items, notably additional hydrogen capacity and
mining fleet, have been ordered after the closing of the equity
placing and are expected to be delivered in time for the capacity
expansion to proceed in the planned timetable.
Factoring of sales receivables
Talvivaara has entered into an agreement with a Finnish financial
institution for the factoring of sales receivables from the Company's
nickel and cobalt products.
Short-term outlook
Following the anticipated commissioning of the expanded crushing
circuit and restart of all production processes in early September,
Talvivaara expects to continue its production ramp-up targeted at
eventually achieving up to 50,000 tonnes in annual nickel production
in 2012. While production guidance for 2009 has been withdrawn as a
result of technical issues in materials handling, the Company
reiterates its production target of approximately 30,000 tonnes of
nickel in 2010.
The Company does not anticipate its production plans to be affected
by commodity prices. Following the successful closing of its equity
placing in July, Talvivaara believes it has sufficient liquidity to
cover the cost of capacity expansion, expected to be incurred mostly
in 2009 and 2010.
Change in financial reporting
As a consequence of its secondary listing in Helsinki in May 2009,
the Company is now required to issue financial reports quarterly. The
quarterly report for Q3 2009 will be released on 11 November 2009.
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Unaudited Unaudited Audited
three three six six twelve
(all amounts in months to months to months to months to months to
EUR '000) 30 Jun 09 30 Jun 08 30 Jun 09 30 Jun 08 31 Dec 08
Turnover 1,652 - 1,778 - -
Other operating
income 6,296 4,310 25,553 9,166 29,810
Changes in
inventories
of finished goods
and
work in progress 17,795 - 32,077 - 24,006
Materials and
services (13,869) (981) (27,504) (1,521) (20,407)
Employee benefit
expenses (4,282) (2,633) (8,065) (4,127) (8,910)
Depreciation,
amortization,
depletion and
impairment charges (8,351) (114) (16,219) (197) (5,756)
Other operating
expenses (9,369) (3,805) (15,525) (7,942) (23,039)
Operating profit
(loss) (10,128) (3,223) (7,905) (4,621) (4,296)
Finance income 14,462 2,003 7,013 2,285 9,219
Finance cost (7,201) (1,409) (13,797) (2,115) (12,956)
Finance cost (net) 7,261 594 (6,784) 170 (3,737)
Loss before income
tax (2,867) (2,629) (14,689) (4,451) (8,033)
Income tax expense 507 (1,375) 3,491 (1,532) 13,865
Profit (loss) for
the period (2,360) (4,004) (11,198) (5,983) 5,832
Attributable to:
Equity holders of
the Company (1,943) (2,552) (9,105) (3,962) 7,042
Minority interest (417) (1,452) (2,093) (2,021) (1,210)
(2,360) (4,004) (11,198) (5,983) 5,832
Earnings per share for profit
(loss) attributable to the
equity holders of the
Company (expressed in € per
share)
Basic and diluted (0.04) (0.02) (0.04) (0.02) 0.03
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited
Unaudited Unaudited Unaudited Unaudited twelve
three three six six months
months to months to months to months to to
(all amounts in EUR 31 Dec
'000) 30 Jun 09 30 Jun 08 30 Jun 09 30 Jun 08 08
Profit (loss) for the
period (2,360) (4,004) (11,198) (5,983) 5,832
Other comprehensive
income, items net of
tax
Available-for-sale
financial
assets - (513) - (451) (451)
Cash flow hedges (54,573) 14,018 (47,367) 10,306 90,414
Other comprehensive
income, net of tax (54,573) 13,505 (47,367) 9,855 89,963
Total comprehensive
income (56,933) 13,505 (58,565) 3,872 95,795
Attributable to:
Equity holders of the
Company (45,602) 8,150 (46,999) 3,832 78,922
Minority interest (11,331) 1,351 (11,566) 40 16,873
(56,933) 9,501 (58,565) 3,872 95,795
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(all amounts in EUR '000) Unaudited Audited Unaudited
30 Jun 09 31 Dec 08 30 Jun 08
ASSETS
Non-current assets
Property, plant and equipment 590,486 552,459 301,585
Biological assets 6,503 8,152 8,354
Intangible assets 7,586 7,774 7,301
Derivative financial instruments 60,141 116,004 26,303
Other receivables 11,449 9,635 18,637 676,165 694,024 362,180
Current assets
Inventories 66,514 31,691 -
Trade receivables 1,823 - -
Other receivables 13,978 24,721 20,441
Derivative financial instruments 41,875 40,805 3,741
Cash and cash equivalent 24,259 82,713 74,117
148,449 179,930 98,299
Total assets 824,614 873,954 460,479
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent
Share capital 80 80 80
Share premium 8,086 8,086 8,086
Other reserves 335,273 334,019 333,072
Hedge reserve 34,438 72,332 8,245
Retained earnings (35,206) (26,101) (37,106)
342,671 388,416 312,377
Minority interest in equity 23,904 35,470 18,630
Total equity 366,575 423,886 331,007
Non-current liabilities
Borrowings 420,896 367,955 72,955
Trade payables - - 3
Other payables - - -
Derivative financial instruments 2,801 1,985 912
Deferred tax liabilities 2,938 23,070 10,322
Provisions 959 944 9
427,594 393,954 84 201
Current liabilities
Borrowings 780 224 25
Trade payables 20,646 45,283 40,606
Other payables 7,587 8,294 4,545
Derivative financial instruments 1,432 2,279 61
Provisions - 34 34
Current income tax liabilities - - -
30,445 56,114 45,271
Total liabilities 458,039 450,068 129,472
Total equity and liabilities 824,614 873,954 460,479
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Unaudited Unaudited Audited
three three six six twelve
months to months to months to months to months to
(all amounts in EUR
'000) 30 Jun 09 30 Jun 08 30 Jun 09 30 Jun 08 31 Dec 08
Cash flows from
operating activities
Profit (loss) for
the period (2,360) (4,004) (11,198) (5,983) 5,832
Adjustments for
Tax (507) 1,375 (3,491) 1,532 (13,865)
Depreciation and
amortization 8351 114 16,219 197 5,756
Other non-cash income
and expenses 1,187 (554) 2,724 1,508 4,780
Interest income (14,462) (2,003) (7,013) (2,285) (9,219)
Fair value gains on
financial assets at
fair value through
profit or loss 10,266 (2,255) (8,190) (4,601) (24,796)
Interest expense 7,201 1,409 13,797 2,115 12,956
9,676 (5,918) 14,046 (7,517) (18,556)
Change in working
capital
Decrease(+)/increase(-)
in other receivables (11,640) 12,226 6,781 3,298 4,552
Decrease (+)/increase
(-)
in inventories (20,934)) - (34,718) - (30,661)
Decrease(-)/increase(+)
in
trade and other
payables 3,926 15,505 (25,855) 16,516 23,773
Change in working
capital (28,648) 27,731 (53,792) 19,814 (2,336)
(18,972) 21,813 (50,944) 12,297 (20,892)
Interest and other
finance
cost paid (7,571) (3,129) (11,554) (3,686) (7,468)
Interest income 388 438 3,378 455 9,581
Net cash used in
operating activities (26,155) 19,122 (59,120) 9,066 (18,779)
Cash flows from
investing activities
Purchases of property,
plant and equipment (27,985) (104,915) (57,660) (171,757) (427,187)
Purchases of biological
assets - - (35) (26) (26)
Purchases of intangible
assets (35) (97) (42) (1,119) (1,873)
Proceeds from sale of
property, plant and
equipment - - 9 - -
Proceeds from sale of
intangible assets 49 - 49 - -
Proceeds from sale of
biological assets - 127 - 127 707
Proceeds from
government
grant related to
tangible assets 5,000 - 5,000 - -
Proceeds from
government
grant related to
intangible assets - - 13 - 203
Proceeds from sale of
available
for sale financial
assets - 26,356 - 26,356 26,356
Purchases of derivative
financial instruments - - (1,371) (1,371)
Proceeds from sale of
derivative
financial instruments - 661 - 1,440 -
Purchases of financial
assets at fair value
through profit or loss - - - - 1,440
Net cash used in
investing
activities (22,971) (77,868) (52,666) (146,350) (401,751)
Cash flows from
financing activities
Proceeds from share
issue
net of transaction
costs - - - - -
Share premium - - - - -
Proceeds from interest
bearing liabilities 52,988 84,900 53,357 84,900 396,734
Payment of interest
bearing liabilities (25) - (25) - (20,000)
Capital investment by
minority shareholders - - - - 8
Net cash generated in
financing activities 52,988 84,900 53,332 84,900 376,742
Net (decrease)/increase
in
cash and bank
overdrafts 3,837 26,154 (58,454) (52,384) (43,788)
Cash and bank
overdrafts at
beginning of the period 20,422 47,963 82,713 126,501 126,501
Cash and bank
overdrafts
at end of the period 24,259 74,117 24,259 74,117 98,299
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(all Share Share Invested Other Hedge Retained Total Mino- Total
amounts capi- premium unrestric- reser- reserve ear- rity equity
in EUR tal ted ves nings inte-
'000) equity rest
Balance 16 8 086 320 671 1 106 - -33 423 296 18 315
at 456 591 047
1 Jan 08
Total - - - (451) 8 245 (3 962) 3 832 39 3 871
compre-
hensive
income for
1-6/2008
Transfers 64 - (64) - - - - - -
within
equity,
change of
the
corporate
form
Issue of - - - - - - - - -
new
shares
Employee
share
option
scheme
- value of - - - 914 - - 914 - 914
employee
services
Convertible
capital
loan
- conversion - - - - - - - - -
into
shares
Convertible
bond
- conversion - - - - - - - - -
into
shares
Convertible - - - 10 896 - - 10 - 10 896
bond, 896
equity
component
Restatement - - - - - 278 278 - 278
to capital
expenditure,
which
relates to
previous
year
Minority - - - - - 1 1 - 1
interest
arising
from
subsidiary
Balance at 80 8 086 320 607 12 465 8 245 (37 106) 312 18 331
30 June 377 630 007
2008
Balance at 80 8 086 320 607 13 412 72 332 (26 101) 388 35 423
31 Decem- 416 470 886
ber 2008
Balance at 80 8 086 320 607 13 412 72 332 (26 101) 388 35 423
1 Janu- 416 470 886
ary 2009
Fair value - - - - - - - - -
changes
net of tax
on
available-
for-sale
financial
assets
Total - - - - (37 (9 105) (46 (11 (58
compre- 894) 999) 566) 565)
hensive
income
for 1-6/
2009
Transfers - - - - - - - - -
within
equity,
change
of the
corporate
form
Convertible - - - - - - - - -
bond,
equity
component
Employee
share
option
scheme
- value of - - - 1 254 - - 1 254 - 1 254
employee
services
Restate- - - - - - - - - -
ment to
capital
expendi-
ture, which
relates to
last year
Balance at 80 8 086 320 607 14 666 34 438 (35 206) 342 23 366
30 June 671 904 575
2009
NOTES
1. Basis of preparation
This Interim Consolidated Financial Statement 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 2008, added with the following changes.
Revenue recognition
Revenue is recognized, net of treatment charges, foreign exchange
gains and losses resulting from the settlement and any applicable
sales taxes, from a sale when evidence of an arrangement exists, the
price is determinable, the product has been delivered, the title has
been transferred to the customer and collection of the sales price is
reasonably assured. Most sales are being priced in US dollars and as
delivered duty unpaid (d.d.u.).
A large proportion of Group production is sold under long term
contracts, but sales revenue is only recognised on individual sales
when persuasive evidence exists that all of the following criteria
are met:
- all material risks and rewards of ownership have been transferred
to the buyer;
- there is no continuing managerial involvement to the degree
usually associated with ownership or effective control over goods
sold;
- the amount of revenue can be measured reliably;
- the costs incurred or to be incurred in respect of the sale can
be measured reliably; and
- the flow of future economic benefits is probable.
Most products are "provisionally priced", i.e. the sales price is
subject to final adjustment at the end of a quotational period. The
quotational period is a time frame during which the final sales price
is determined. The principal risks associated with recognition of
sales on a provisional basis include metal price fluctuations between
the date initially recorded and the date of final settlement. If a
significant decline in metal prices occurs between the provisional
pricing date and the final settlement date, it is reasonably possible
that the Group could be required to return a portion of the sales
proceeds received based on the provisional invoice.
Sales are initially recorded based on 100% of the provisional sales
prices. Until final settlement occurs, adjustments to the provisional
sales prices are made to take into account the mark-to-market changes
based on the forward prices for the estimated month of settlement.
These adjustments are made at the end of a reporting period e.g.
financial year or quarter. For this purpose, the selling price can be
measured reliably for those products, for which there exists an
active and freely traded commodity market such as the London Metals
Exchange. The marking to market of provisionally priced sales
contracts is recorded as an adjustment to sales revenue. For changes
in metal quantities upon receipt of new information and assay, the
provisional sales quantities are adjusted as well.
Inventories
(all amounts in EUR '000) Unaudited Audited
30 Jun 09 31 Dec 08
Raw materials and consumables 8,353 6,655
Ore on leach pads 45,073 22,965
Work in progress 10,575 1,041
Finished products 435 -
Advance payments 2,078 1,030
Inventories total 66,514 31,691
2. Derivative financial instruments
Fair values of the derivative financial instruments
Derivative financial
instruments
Fair values of the
derivative Unaudited Audited
financial instruments 30 Jun 09 31 Dec 08
(all amounts in EUR '000) Assets Liabilities Assets Liabilities
Nickel forwards-cash flow
hedges 69,899 - 135,355 -
Nickel forwards-held for
trading 10,719 - 3,301 -
Zinc forwards-held for
trading 8,181 - 18,153 -
Interest rate swaps-held
for trading - 2,801 - 2,279
Currency forwards-held for
trading 13,217 209 - -
Currency options-held for
trading - 1,223 - 1,985
Total 102,016 4,233 156,809 4,264
Unaudited Audited
30 Jun 09 31 Dec 08
Assets Liabilities Assets Liabilities
Derivative financial
instruments 102,016 4,233 156,809 4,264
Total 102,016 4,233 156,809 4,264
Less non-current portion
Nickel forwards -cash flow
hedges 48,904 - 101,797 -
Nickel forwards-held for
trading - - - -
Zinc forwards-held for
trading 4,856 - 14,207 -
Interest rate swaps-held
for trading - 2,801 - 1,985
Currency forwards-held for
trading 6,381 - - -
Currency options-held for
trading - - - -
Current portion 41,875 1,432 40,805 2,279
Quantities of the derivative
financial instruments
Unaudited Audited
30 Jun 09 31 Dec 08
Non- Non-
Current current Total Current current Total
Nickel
forwards
- cash
flow
hedges,
in
tonnes 2,451 9,989 12,440 3,429 12,128 15,557
Nickel
forwards
- held
for
trading,
in
tonnes 2,303 - 2,303 404 - 404
Zinc
forwards
- held
for
trading,
in
tonnes 12,486 23,622 36,108 7,458 30,559 38,017
Interest
rate
swaps -
held for
trading,
in EUR - 36,636,000 36,636,000 - 36,636,000 36,636,000
Currency
forwards
-
held for
trading,
in GBP 51,800,000 - 51,800,000 - - -
Currency
forwards
-
held for
trading,
in USD 127,375,000 64,062,500 191,437,500 - - -
Currency
options
- held
for
trading,
in USD 112,000,000 - 112,000,000 209,800,000 - 209,800,000
Borrowings
Carrying
mount Fair value
(all
amounts in
EUR '000)
Unaudited Audited Unaudited Audited
Non-current 30 Jun 09 31 Dec 08 30 Jun 09 31 Dec 08
Capital
loans 1,405 1,405 1,405 1,405
Project
Term Loan
Facility 226,404 229,935 226,404 229,935
Senior
Unsecured
Convertible
Bonds 74,149 72,842 74,149 72,842
Railway
Term Loan
Facility 30,323 25,461 30,323 25,461
Working
capital
loan 44,372 - 44,372 -
Finance
lease
liabilities 4,829 1,694 4,829 1,694
Interest
Subsidy
Loans 4,184 4,182 4,184 4,182
Other 35,229 32,436 35,229 32,436
420,895 367,955 420,895 367,955
Current
Finance
lease
liabilities 781 199 781 199
Other - 25 - 25
781 224 781 224
Total
borrowings 421,676 368,179 421,676 368,179
KEY FIGURES
Three Three Six Six Twelve
months months months months months
to to to to to
30 Jun 31 Dec
30 Jun 09 30 Jun 08 30 Jun 09 08 08
Operating
profit EUR
(loss) '000 (10 128) (3 223) (7,905) (4 621) (4 296)
Return on
equity -0.6 % -1.3 % -2.8 % -1.9 % 1.6 %
Equity-to
assets ratio 44 % 72 % 44 % 72 % 49 %
Net interest EUR
bearing debt '000 397 417 (21 602) 397 417 (21 602) 285 467
Debt-to
equity
ratio 108,4% -6,5% 108,4% -6,5% 67,3%
Capital EUR
expenditure '000 28 020 105 012 57 737 172 902 429 086
Research &
development EUR
expenditure '000 0 0 0 62 181
Property,
plant and EUR
equipment '000 590 486 301 585 590 486 301 585 552 458
Derivative
financial EUR
instruments '000 97 783 29 071 97 783 29 071 152 545
EUR
Borrowings '000 421 676 72 930 421 676 72 930 368 179
Cash and
cash
equivalents
at the end EUR
of the period '000 24 259 74 117 24 259 74 117 82 713
Three Three Six Six Twelve
months months months months months
to to to to to
Share-
related 30 Jun 31 Dec
key figures 30 Jun 09 30 Jun 09 30 Jun 09 08 08
Earnings per
share EUR (0.01) (0.01) (0.04) (0.02) 0.03
Equity per
share EUR 1.54 1.40 1.54 1.40 1.74
Development
of share
price at
London
Stock
Exchange
Average
trading
price1 EUR 3.36 5.05 3.01 4.69 3.64
GBP 2.95 4.01 2.69 3.64 2.90
Lowest
trading
price1 EUR 2.26 4.66 1.44 3.61 1.22
GBP 1.99 3.70 1.29 2.80 0.98
Highest
trading
price1 EUR 4.69 5.66 4.61 5.79 5.64
GBP 4.12 4.49 4.12 4.49 4.49
Trading
price at
the end of
the period2 EUR 3.99 4.66 3.99 4.66 1.25
GBP 3.40 3.70 3.40 3.70 1.19
Change
during the
period 56.5 % -2.8 % 185.7 % 23.2 % -60.3 %
Market
capitalization
at the end
of the EUR 1 039
period3 '000 889 390 1 039 575 889 390 575 278 475
GBP
'000 757 849 823 603 757 849 823 603 265 247
Development
in trading
volume
Trading 1000
volume shares 65 151 21 131 83 504 38 769 84 780
In relation to
weighted
average
number of
shares 29.2 % 9,5 % 37.5 % 17.4 % 38.0 %
Development
of share
price at OMX
Helsinki
Average
trading price EUR 3.97 3.97
Lowest
trading price EUR 3.05 3.05
Highest
trading price EUR 4.85 4.85
Trading price
at the
end of the
period EUR 4.05 4.05
Change
during
the period 0.29 29.4 %
Market
capitalization
at the end of EUR
the period '000 902 732 902 732
Development
in trading
volume
Trading 1000
volume shares 41398 41 398
In relation to
weighted
average
number of
shares 18.6 % 18.6 %
Adjusted
average
number of 222 896 222 896 222 896 222 896 222 896
shares 718 718 718 718 718
Number of
shares at
the end of 222 896 222 896 222 896 222 896 222 896
the period 718 718 718 718 718
1) Trading price is calculated on the average of EUR/GBP
exchange rates published by the European Central Bank during the
period
2) Trading price is calculated on the EUR/GBP exchange rate
published by the European Central Bank at the end of the period
3) Market capitalization is calculated on the EUR/GBP exchange
rate published by the European Central Bank at the end of the period
Employee-related key figures
Three Three Six Six Twelve
months to months to months to months to months to
30 Jun 09 30 Jun 08 30 Jun 09 30 Jun 08 31 Dec 08
EUR '000
Wages and
salaries 3,581 2,200 6,850 3,525 5,756
Average number
of employees 272 165 268 133 178
Number of
employees at the
end of the period 276 191 276 191 239
Three Three Six Six Twelve
months to months to months to months to months to
Other figures 30 Jun 09 30 Jun 08 30 Jun 09 30 Jun 08 31 Dec 08
Share options
outstanding at
the end of the
period 4,442,500 2,285,000 4,442,500 2,285,000 4,442,500
Number of shares
to be issued
against
the outstanding
share options 4,442,500 2,285,000 4,442,500 2,285,000 4,442,500
Rights to vote of
shares to be
issued against
the outstanding
share options 2.0 % 1.0 % 2.0 % 1.0 % 2.0 %
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
Interest-bearing debt - Cash and cash
Net interest-bearing debt equivalent
Debt-to-equity ratio Net interest-bearing debt
Total equity
Share-related key figures
Profit (loss) attributable to equity
Earnings per share holders of the Company
Adjusted average number of shares
Equity attributable to equity holders of
Equity per share the Company
Adjusted average number of shares
Number of shares at the end of the
Market capitalization at the period * trading price
end of the period at the end of the period
[1] At EUR/GBP exchange rate of 0.8612 on 6 July 2009, as applied to
73% of the issue which was subscribed and paid in GBP.
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