Transcript Talvivaara Projekti Oy

August 2009
DISCLAIMER
The following information contains, or may be deemed to contain, “forward-looking statements” (as defined in the U.S. Private Securities Litigation
Reform Act of 1995). These statements relate to future events that involve known and unknown risks and other uncertainties. By their nature,
forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in
the future. All forward-looking statements made in this presentation based on information presently available and Talvivaara Mining Company Plc.
assumes no obligation to update any forward-looking statements.
Nothing in this presentation constitutes investment advice and this presentation shall not constitute an offer to sell or the solicitation of an offer to buy
any securities or otherwise to engage in any investment activity.
1
Highlights
• Successful EUR 82.7 million / GBP 71.3 million placing completed in
July putting Talvivaara in strong financial position
• Decision to expand production capacity by almost 50% to up to 50,000
tonnes nickel per annum from 2012
• Good progress with upgrade of crushing circuit to eliminate earlier
design problems and to expand capacity to approx. 22 million tonnes
of ore per annum
• As anticipated, crushing capacity with old circuit remained below
budgeted levels due to significant downtime
• Successful nickel and zinc sulphide production campaigns in Jan-Feb
and Apr-May with subsequent product deliveries to Norilsk Nickel and
zinc customers
• Secondary listing of shares on Helsinki Stock Exchange on
11 May 2009 resulting in significant expansion of shareholder base
• Continued good safety record with 3 LTI’s to Talvivaara personnel in
Jan 2009 and none since the launch of the Work Group Safety
Challenge in Feb 2009
Kuusilampi open pit at Talvivaara June 2009
2
Key figures
H1 2009
H1 2008
FY 2008
Turnover
EURm
1.8
-
-
Operating profit (loss)
EURm
(7.9)
(4.6)
(4.3)
Profit (loss) before taxes
EURm
(14.7)
(4.5)
(8.0)
Earnings per share
EUR
(0.04)
(0.02)
0.03
Capital expenditure
EURm
57.7
172.9
429.1
Net interest-bearing debt
EURm
397.4
(21.6)
285.5
108.4 %
-6.5 %
67.3 %
EURm
24.3
74.1
82.7
EURm
97.8
29.1
152.5
276
191
239
Debt-to-equity ratio
Cash and cash equivalents at the end of the period
Derivative financial instruments
1
Number of employees at the end of the period
1 Prior
to receiving the proceeds of the EUR 82.7 million equity placing
3
Financial review
•
First income from deliveries to customers
– Sales EUR 1.8m
– Other operating income EUR 25.6 mostly from realised and
unrealised gains on nickel, zinc and USD forwards
– Operating loss EUR 7.9m
•
Strong cash position
– Drawdown of EUR 45m Finnvera facility
– EUR 82.7m equity placing of 22,280,000 shares at EUR 3.70/
GBP 3.20 each; proceeds were received in July
•
Capital expenditure
– H1 2009 capital expenditure EUR 57.7m on completion of mine
construction and railway
– H2 2009 new commitments towards expansion capex being
made (hydrogen plant, mobile equipment)
4
Production summary
Q2 2009
Q1 2009
Q1-Q2 2009 2008-2009
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
million tonnes
2.1
2.0
4.0
6.5
million tonnes
6.5
4.4
6.5
6.5
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
Materials handling
Stacked ore
Bioheapleaching
Ore in primary heap at end of period
Metals recovery
• Materials handling bottleneck being resolved alongside expansion
5
Production update – mining and materials handling
•
Mining
– Processes performing well
– Full capacity not tested due to bottleneck in crushing
•
Materials handling
– Ongoing problems in fine crushing throughout H1 2009
despite temporary improvements in capacity as a result of
amendments to existing circuit
•
Total capacity achieved H1 2009 was 4.0 mt or ore
(53% of budgeted amount)
– Primary crusher also experienced technical problems
•
•
Modifications being made
•
Capacity secured by contractors for the time being
Crushing circuit being upgraded
– Capacity to increase to 22 million tonnes per annum
– Installation of redesigned circuit progressing on schedule for
start-up in the beginning of September
6
Installation of upgraded crushing circuit progressing as planned
New secondary crushing equipment installed, 24 Aug 2009
7
Production update - bioheapleaching and metals recovery
• Bioheapleaching
– Bioheapleaching proceeding as planned
– Control of heat generation through aeration and irrigation critical
to prevent re-precipitation metals in the heap
– 6.5 million tonnes of ore under leaching at the end of H1 2009
– Plans to stack the heap in two layers being reconsidered;
likely return to original plan of a single layer primary heap
• Metals recovery
– Successful nickel and zinc production campaigns in JanuaryFebruary and April- May
– Production levels during May campaign
•
Nickel
12-14 tonnes/day
•
Zinc
29-30 tonnes/day
– Leached amounts corresponded to the size and age of the
heap at the time
– Quality of metal products good and improving throughout
campaigns
8
Environment, health and safety
• Environment
− Ongoing environmental management and monitoring programme
according requirements set out in the Environmental Permit
– Talvivaara is preparing its environmental processes for ISO 14001 certification
• Health and safety
− Good health and safety record
− Three minor lost time injuries (LTIs) among Talvivaara
employees during H1, none since the launch of
Work Group Satey Challenge in Feb 2009
Talvivaara personnel 2003-2010e
• Good safety rating
450
400
− Talvivaara: 12 LTIs/ million man hours
− Construction industry: 80 LTIs/ million man hours
Number of personnel
− Finnish mining industry: 40 LTIs/ million man hours
350
300
250
200
150
100
50
0
2003
2004
2005
2006
2007
2008
2009
2010
Aug 2009
9
Market outlook
•
Short term outlook still uncertain
– Underlying demand yet to grow
– Temporary fall in commodity prices still possible
•
Positive long term outlook
– Promising recent development in developing economies
– Signs of restocking and increasing industrial demand
also on OECD markets
10