Transcript Talvivaara Vanadium Project Presentation structure

Annual Results
24 February 2010
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
2009 highlights
•
•
•
•
First nickel sulphide delivery to Norilsk Nickel Harjavalta Oy - February
Secondary listing of Talvivaara shares on the Helsinki Stock Exchange - May
Successful equity placing of approx 22.3m shares with €82.7m gross proceeds - July
Decision to expand production capacity to 50,000 tpa nickel and 95,000 tpa zinc from
2012, funded by the equity placing - July
• Commissioning of redesigned, upgraded crushing circuit with 22m tpa crushing capacity
- September
• Commissioning of Talvivaara-Murtomäki railhead - September
2
Highlights after the reporting period
• Completion of zinc streaming agreement with
Nyrstar NV; $335m purchase payment
received
• Early repayment in full of $320m Project Term
Loan Facility
• Closing of all nickel, zinc and foreign
exchange risk hedging positions with €45m
net proceeds
• Plans to recover uranium as a by-product of
leaching process; 350 tpa estimated
production
• Bioheapleaching performing 20% over
budgeted levels
3
Key figures
Q4 2009 Q4 2008 2009
Turnover
EUR '000
4,907
Operating profit (loss)
EUR '000
Profit (loss) before taxes
7,571
-
(31,568)
5,280 (54,776)
(4,296)
EUR '000
(45,082)
5,419 (75,085)
(8,033)
Net profit (loss) for the period
EUR '000
(33, 011)
21,179 (54,958)
5,832
Earnings per share
EUR
Return on equity
Equity-to-assets ratio
-
2008
(0.11)
0.08
(0.19)
0.03
-13.7%
1.5%
-13.6%
1.6%
43.5%
48.5%
43.5%
48.5%
EUR '000
Net interest-bearing debt
426,234
Debt- to- equity ratio
Capital expenditure 1
Cash and cash equivalents at the end of the
period
Number of employees at the end of the period
[1]
111.4%
285,467 426,234 285,467
67.3%
111.4%
67.3%
EUR '000
36,462
156,056 118,514 429,086
EUR '000
11,877
82,713
11,877
82,713
308
239
308
239
Includes EUR 11 million expenditure on the Talvivaara-Murtomäki railhead to be reimbursed by the State of Finland
4
Talvivaara in a strong position going into 2010
Cash position and net debt
• At year end EUR 12 million
• At the date of reporting EUR 80 million
• Net debt excluding lease liabilities and railroad loan1 EUR 55 million
Events after reporting period
• Zinc streaming agreement with Nyrstar; initial purchase price received $335m
• Early full repayment of $320m Project Term Loan Facility
• Closing of all nickel, zinc and foreign exchange risk hedging positions with €45m
net proceeds
• Additional cash buffer to Talvivaara Sotkamo Ltd from
– Outokumpu convertible of €5m2
– Varma facility of €25m
1 Railroad
2
loan to be repaid by the reimbursement from the State of Finland in 2010-2011
Non-dilutive to Talvivaara Mining Company; Talvivaara to convert a pro-rata amount of existing intragroup loans
5
Operations - overcoming ramp-up challenges
• Problems with fine crushing circuit resolved with
commissioning of upgraded crushing circuit
– Planned circuit capacity of 60,000t per day
sufficient for expanded production capacity
– Some remaining ramp-up for Q1 2010;
two tertiary crushers to be added if not
otherwise achieved
• Talvivaara no longer reliant on contractor crushing
following modifications to the primary crusher
• Amount of leach solution reached levels necessary
for continuous production from September
– Minor hold-ups caused by technical problems
during Q4 2009 at the metals recovery plant;
resolved after re-lining of reactors
6
Key operational figures
Q4 2009
Mining
Blasted ore
Excavated waste
Materials handling
Stacked ore
Bioheapleaching
Ore in primary heap at the end of period
Metals recovery
Nickel sulphide production
Nickel metal content
Zinc sulphide production
Zinc metal content
Q1-Q3 2009
2009
2008
Mt
Mt
3.5
1.5
7.3
2.9
10.8
4.3
3.0
1.4
Mt
3.0
5.5
8.5
2.5
Mt
11.0
8.0
11.0
2.5
857
410
3,827
2,313
668
325
1,444
820
1,525
735
5,271
3,133
-
DMT
t
DMT
t
7
Recent progress – bioheapleaching performing above target
• Heap section 2 completed in early January
Leaching kinetics in bioheap
60
– Early re-precipitation phase over in early
February
50
40
30
– Improved aeration has shortened the reprecipitation phase to 1-2 months
• Heap section 1 suffered from re-precipitation due
to high temperatures, insufficient aeration and
extended circulation time of irrigation solution
20
10
0
1
-10
1 - 2 months
– Recent development promising after partial
turning over of heap and increased aeration
• Metal grades in solution led to the metals plant
– Nickel >2 g/l
– Zinc >6 g/l
8
Leaching performance compared to budget
2,500
Nickel in solution (mg/l)
Early re-precipitation
phase over
2,000
Section 2 stacking
completed
1,500
1,000
500
Ni Budget
Ni Heap #1 (Act.)
Ni Heap #2 (Act.)
Ni Heap #1 (Adj.)
Ni Heap #2 (Adj.)
01/12/2009
01/01/2010
01/02/2010
04/03/2010
9
Production up and running
• Mining department performing well
• Crushing still slightly below 22mtpa
level, but improving
– Decision on potentially adding
tertiary crushers during Q1
• Catalyst failure at hydrogen plant
fixed
– Metals recovery processes up
and running
10
Research and development
• Biological iron removal from leach solution
– uses local bacteria, reduces limestone
consumption
– successful pilot scale tests
• Recovery of uranium as yellow cake
– uses a safe solvent extraction method
– ongoing process development and plant design
in cooperation with Outotec and Norilsk Nickel
• Manganese recovery
– Electro-winning technology successfully tested
– Decision to move forward pending partnering for
production and marketing
• Optimisation of bioheapleaching process
– Ongoing studies of factors and parameters
involved
Lime stone crushing plant
11
Talvivaara’s planned uranium process is safe for people and
for nature
Open Pit Mining
Bio Heap Leach
Crushing
• The uranium recovery process is
Primary Crushing
TertiaryCrushing
designed to be safe
Secondary Crushing
– Best available technology and
expertise will be used
Screen
– Uranium will be recovered
using a
technically simple and safe
solvent extraction
process
Agglomeration
Ore Storage
H2SO4
– The process will not change
Screen
Talvivaara’s discharge levels into
air, water systems or soil
– The
product will
be properly
Stacker
Reclaim stacker
Primary
Secondary
packaged
in airtight
steel
Heaps
Heaps
Bacteria H2SO4
containers
Air
Air
• The relevant authorities will determine
PLS Pond
terms and conditions
for safe operation
and the process will be properly
Raffinate Pond
PLS Pond
monitored by them
Metals Recovery
Cu Sulphide
H2S
Precipitation
PLS
Copper
Sulphide
Zn Sulphide H2S
Precipitation
Zinc
Sulphide
Uranium Extraction
Yellow
cake
Pre
Neutralisation
Gypsum
Precipitate
Limestone
Ni Co
Sulphide
Precipitation
H2S
Nickel
Cobalt
Sulphide
Limestone
Iron
Precipitation
O2
Lime
Total
Precipitation
Effluent
Gypsum Pond
12
Uranium recovery - operational and financial considerations
Price of yellow cake 2005-2010 (USD/lb)
140
120
100
80
60
40
20
0
31
/0
1/
31 200
5
/0
7/
20
31
05
/0
1/
31 200
6
/0
7/
2
0
31
/0 06
1/
31 200
7
/0
7/
20
31
07
/0
1/
31 200
8
/0
7/
20
31
08
/0
1/
31 200
9
/0
7/
20
31
09
/0
1/
20
10
USD/lb
• Planned annual production
approximately 350 tonnes
• The planned production will
make Finland almost selfsufficient in uranium
• The uranium process is
estimated to employ directly
approx. 20 and indirectly around
50 people
• Estimated capital expenditure
approx. EUR 30 million
• Annual production costs
estimated at approx. EUR 2
million
13
Geology - building data for further resource increases
22,500 meters drilled in 2009
• Target 1: Kuusilampi Southern area infill drilling
– completed in Q3
• Target 2: Kuusilampi Northern extension drilling-
Target 4
– initiated in Q4
– 6,000m completed by year end
• Target 3: Kuusilampi Central area geotechnical
drilling
• Target 4: Kolmisoppi resource infill drilling
Target 2
Target 3
Target 1
14
Environment, Health and Safety – a priority for Talvivaara
Environment
• Environmental processes being prepared
for ISO 14001 certification; audit of environmental
system targeted for Q4 2010
Personnel
• Current number of personnel 308
• Training programmes and recruiting continuing
Safety
• Launch of successful Work Group Safety Challenge in
February 2009
• 6 minor LTI’s recorded in 2009
• 11 LTI/million man hour safety rating-significantly
below industry average
15
Market outlook
Nickel price and LME stock level
• Recovery of base metals prices
from March 2009 lows
25000
170000
• Increased Chinese buying activity
during first half of the year
• Long term confidence in the
fundamental strength of metal
prices and demand
15000
130000
110000
10000
Ni stock level (t)
150000
90000
5000
Ni cash price (USD/t)
Ni LME stock level (t)
0
70000
50000
02
/0
1/
13 2 00
/0
9
2/
2
27
0
/0 09
3/
13 2 00
9
/0
5/
2
25
0
/0 09
6/
06 2 00
9
/0
8/
18 2 00
9
/0
9/
2
30
0
/1 09
0/
11 2 00
/1
9
2/
2
27
0
/0 09
1/
20
10
• Short term correction remains
possible
20000
Ni (USD/t)
• Demand in Western markets not
yet fully recovered
190000
Source: Reuters
16
2010 operational outlook
• Focus on production ramp-up process
• 2010 targeted production:
– Approximately 30,000t nickel
– Approximately 50,000t zinc
17