Talvivaara Mining Cuts Back Production Guidance

PUBLISHED: 16 Aug 2012 @ 13:00 | Comments (0) | More info about Kenneth G. Mondero

Base metals miner Talvivaara Mining Company plc (LSE:TALV) has released a revise guidance for its nickel production for the year to only about 17,000 tonnes of nickel, as the company continues to drain its mine of water brought about by excessive rainfall in spring.

More than a month ago, the Finland-based firm already stated it will not be able to achieve the 25,000 to 30,000 tonnes nickel production target, citing the same reason.

“The revised guidance accounts for the continued heavy rainfall in July and early August, which has further prolonged the water balance issues and dilution of leach solutions at the Sotkamo mine,” Talvivaara said in a statement.

Disappointing

Woes at the firm’s only mine found its way to the company’s financials resulting in a “disappointing” second quarter trading performance revealing a drop in production, compounded by a sharp fall on the price of nickel.

“The nickel price has declined from around USD 21,000-22,000 per tonne in early 2012 to around USD 16,000 per tonne during the summer, primarily driven by macroeconomic uncertainty and weak stainless steel fundamentals,” newly-appointed Chief Executive, Hari Natunen stated.

That resulted to a 30.4% fall on net sales for the first half of 2012 to €72.5 million and an operating loss of €22.3 million compared with €10.4 million operating profit the year before.

Talvivaara, nonetheless, assured its shareholders that, taking into account all considerations, the company is still able to continue “in operational existence” with adequate financial resources, even as debt ballooned to €604.4 million against cash of €128 million as at 30^th June 2012.

All eyes are now on the newly restructured management team headed by Mr. Natunen to turn the company back to profitability as the weakness in the price of the steelmaking ingredient continues to post uncertainty in the mining industry.

Shares have partially recovered from a drop of 5.6% to £1.324 early in the morning less, following the news but still down 2.4% to £1.369 by 1:00 PM GMT.

Company Spotlight

Talvivaara Mining Company plc is a base metal producer focussing on nickel and zinc, produced from its main asset in Finland. The company is listed on the main market of the London Stock Exchange.

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