Talvivaara Mining Company Plc Half Interim Report January-June 2009
(Thomson Reuters ONE) - Stock Exchange Release 27 August 2009Talvivaara Mining Company Plc ("Talvivaara" or the "Company") todayannounces its unaudited Interim Results for the three and six monthperiods 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 metalderivatives 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 fromFinnvera; and- Equity placing of approximately 22.3 million shares withgross proceeds of EUR 82.7 million[1] (GBP 71.3 million), asannounced in June and completed in July 20091. At EUR/GBP exchange rate of 0.8612 on 6 July 2009, as applied to73% of the issue which was subscribed and paid in GBP.Key Figures Q2 Q2 Q1-Q2 Q1-Q2 2009 2008 2009 2008 FY 2008 EURTurnover '000 1,652 - 1,778 - -Operating profit EUR(loss) '000 (10,128) (3,223) (7,905) (4,621) (4,296)Profit (loss) EURbefore 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 EURCapital expenditure '000 28,020 105,012 57,737 172,902 429,086Net interest-bearing EURdebt '000 397,417 (21,602) 397,417 (21,602) 285,466Debt-to-equity ratio 108.4% -6.5% 108.4% -6.5% 67.3%Cash and cashequivalents at the EURend of the period '000 24259 74,117 24259 74117 82,713Derivative financial EURinstruments '000 97,783 29,071 97,783 29,071 152,545Number of employeesat the end of theperiod 276 191 276 191 239Pekka Perä, CEO of Talvivaara commented: "I am delighted to be ableto look back on a positive half year for Talvivaara as we progresstowards full production. We have decided to accelerate our growth byincreasing production capacity by almost 50% to up to 50,000 tonnesof nickel per annum from 2012. In the meantime, we are addressing thedesign problems experienced with our existing crushing circuit andanticipate the upgraded facilities to be commissioned and operationalin September.The past six months have seen our financial position strengthen andour shareholder base deepen and broaden through our successful EUR82.7million equity placing in July and, respectively, our secondarylisting on the Helsinki Stock Exchange in May. In conjunction withthe hard work of our operational and managerial team, we areconfident that these developments put us in a position to achieve ourproduction target of approximately 30,000 tonnes of nickel in 2010and to continue growing Talvivaara into an internationallysignificant nickel producer."Enquiries:Talvivaara Mining Company Plc Tel. +358 20 712 9800Pekka Perä, CEOSaila Miettinen-Lähde, CFOMerlin Tel. +44 20 7653 6620Tom RandellAnca SpiridonAn analyst presentation will be webcast at 11.00 UK time/ 13.00Finnish time on 27 August 2009 and will be available on theTalvivaara website, www.talvivaara.com. The webcast is alsoaccessible 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 seniormanagement following the presentation via the following numbers:Europe & U.K Participants: +44 (0)20 7162 0025US Participants: +1 334 323 6201Conference ID: 844147CEO StatementOur focus over the last six months has been to achieve the ramp up ofproduction to our targeted figures promptly and efficiently despitethe 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 thecrushing process is progressing as planned and we look forward tobeing able to confirm successful installation and commissioning ofthe redesigned and expanded crushing circuit in September, asplanned.Based on our experience from Talvivaara operations so far andfollowing the successful equity placing carried out this summer, I ampleased to update on positive progress so far with our plan toincrease our production capacity to up to 50,000 tonnes of nickelannually from 2012. After the closing of the equity placing westarted the investment programme related to the production expansionby ordering critical long-lead items such as the second hydrogenplant and additional mobile equipment.We have put a lot of emphasis on environmental, health and safetyissues, and we are all very proud of our record of zero Lost TimeInjuries to Talvivaara personnel since we launched our Work GroupSafety Challenge in February. On the environmental side, ourperformance was also good and we have no material concerns. We intendto maintain our good record on the environment and on occupationalhealth and safety.The commodities markets have shown some signs of improvement mainlyon re-stocking, but an underlying increase in demand is stillawaited. We would not be surprised to see commodities prices retractsomewhat from their present levels in the short term, but our longterm view is very positive. The latest economic data from thedeveloping economies has only strengthened this view. In anyforeseeable pricing environment, as a low cost producer, Talvivaarais in a strong position.On the equity markets, the liquidity of the Talvivaara shares hasimproved, and our shareholder base, as listed in the Finnish CentralShare Depository, broadened from approximately 700 shareholders justprior to our secondary listing on the Helsinki Stock Exchange in Mayto some 11,500 by the end of June and to over 13,000 in late August.We are very pleased with this development, which demonstratesincreasing interest and support from our Finnish retail andinstitutional investors and which complements our already stronginternational shareholder base. We would also like to thank ourshareholders for their continued support in our recent equityplacing, showing their appreciation for our achievements in bringingthe Talvivaara mine to production and their support of our commitmentto taking it to the next level.Pekka PeräCEOFinancial reviewTalvivaara's sales during the three and six month periods ended 30June 2009 amounted to EUR 1.7 million (Q2 2008: nil) and EUR 1.8million (Q1-Q2 2008: nil), respectively, reflecting the start ofmetal sulphide deliveries from the Talvivaara mine to customers. Thesales volumes remained below budgeted levels due to limited crushingcapacity resulting from technical design issues with the crushingcircuit.The Company's other operating income, amounting to EUR 6.3 million inQ2 2009 (Q2 2008: EUR 4.3 million) and EUR 25.6 million for Q1-Q22009 (Q1-Q2 2008: EUR 9.2 million), consisted mainly of realised (EUR12.2 million) and unrealised (EUR 13.2 million) gains on nickel, zincand USD forwards. Other operating expenses, which in Q2 2009 amountedto EUR (9.4) million (Q2 2008: EUR (3.8) million) and in Q1-Q2 2009to EUR (15.5) million (Q1-Q2 2008: EUR (7.9) million), includedunrealised fair value losses on biological assets (trees) and nickeland zinc forward swaps held for trading.Employee benefit expenses including the value of employee expensesrelated 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) millionfor the first six months of the year (Q1-Q2 2008: EUR (4.1) million).The increase was attributable to increase in the number ofemployees.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 ofthe year (Q1-Q2 2008: EUR (4.6) million).Finance income in Q2 2009 of EUR 14.5 million (Q2 2008: EUR 2.0million) and in Q1-Q2 2009 of EUR 7.0 million (Q1-Q2 2008: EUR 2.3million) included exchange rate gains on the USD 320 million projectloan 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 mostlyto the Company's borrowings, in particular to the project loanfacility and the EUR 84.9 million convertible bond.Loss for the period in Q2 2009 amounted to EUR (2.4) million (Q22008: EUR (4.0) million) and totalled EUR (11.2) million for thefirst 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 adecrease in hedge reserves brought about by the increase in nickelprice during the first half of the year.In the consolidated statement of financial position as at 30 June2009, property, plant and equipment totalled EUR 590.5 million (31December 2008: EUR 552.5 million), with the increase since the yearend 2008 attributable to expenditure on and capitalisation of minerelated assets according to plan. Other notable changes in theCompany's assets include the substantial decrease in the fair valueof derivative financial instruments, in particular nickel and zincforward swaps, brought about by an increase in nickel and zinc pricesduring the reporting period. As at 30 June 2009, the net value ofderivative financial instruments was EUR 97.8 million (31 December2008: EUR 152.5 million).Inventories amounted to EUR 66.5 million (31 December 2008: 31.7million) with the increase relating mostly to ore on leach pads andwork in progress, both valued at cost. Cash and cash equivalentstotalled EUR 24.3 million (31 December 2008: EUR 82.7 million) at theperiod end prior to receipt of the equity placing proceeds in July.In equity and liabilities, the hedge reserve relating to nickel cashflow hedges decreased from EUR 72.3 million on 31 December 2008 toEUR 34.4 million on 30 June 2009 due to increase in the market priceof nickel. Borrowings increased from EUR 368.2 million to EUR 421.7million, with the change primarily reflecting draw down of the EUR 45million investment and working capital loan from Finnvera Plc.Total equity and liabilities as at 30 June 2009 amounted to EUR 824.6million (31 December 2008: EUR 874.0 million).Currency and commodity hedges and hedge accountingThe Company entered into a currency hedging programme comprising USDforwards for seven quarters from Q2 2009 through Q4 2010. The hedgedamount is EUR 175 million in total, with EUR 25 million maturing eachquarter. The forwards were executed in April 2009 at EUR/USD ratesranging from 1.26 to 1.28.In addition, the Company has outstanding currency option contractswhich at the end of the period amounted to USD 112 million. TheEUR/USD strike price of the option contracts is 1.60. The optionswill mature during the second half of 2009.As at 30 June 2009, the Company had 14,743 tonnes of nickel and36,108 tonnes of zinc forward swaps remaining of its commodityhedging programme executed in 2007 and 2008 and extending through2011. The volume weighted average prices of the outstanding positionsare USD 23,561 per tonne for nickel and USD 1,949 per tonne for zinc.Talvivaara applies hedge accounting to nickel hedges maturing in Q42009 - Q4 2011.FinancingDuring the period, Talvivaara drew down EUR 45 million of theinvestment and working capital loan granted by Finnvera Plc. The loanis now fully drawn down as the remaining EUR 5 million of Finnvera'stotal commitment of EUR 50 million is used for capitalisation ofinterest. 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 forthe railroad construction during the first half of the year. Of thetotal committed facility of EUR 45 million, EUR 30.8 million had beendrawn as at 30 June 2009.The interest margin of Talvivaara's fully drawn project term loan ofUSD 320 million was increased, effective as of 16 April 2009, to3.25% pre-completion and will fall to 3.00% post-completion. Theeconomic completion that triggers the lower interest margin isexpected to take place during 2010.The Company received a EUR 5 million reimbursement from the FinnishGovernment for infrastructure investments relating to power supplyand electrification. The subsidy was part of the overall decision bythe Finnish Parliament in 2007 to grant EUR 52 million to support theconstruction of necessary infrastructure to the Talvivaara mine.On 2 June 2009 the Company announced an equity placing of 22,280,000shares to institutional investors, representing approximately 10 percent of the existing issued share capital. The placing wassuccessfully conducted through an accelerated book-building processand priced at EUR 3.70 (GBP 3.20) per share, raising gross proceedsof EUR 82.7 million (GBP 71.3 million). At the end of the reportingperiod, the completion of the share issue was subject to shareholderapproval which was subsequently received at the Extraordinary GeneralMeeting held on 6 July 2009.Production summaryTalvivaara produced its first saleable quantities of nickel and zincsulphides in February 2009, followed by a second metals recoverycampaign in May 2009. The production volumes remained substantiallybelow budgeted levels, however, due to limited amounts of leachsolution available for treatment. This was caused by technicalproblems in crushing, which in turn limited the amount of ore underleaching.The mining department blasted 5.3 million tonnes of ore and excavated1.8 million tonnes of waste during the first half of the year. Themining operations performed well, however not at full capacity due tothe bottleneck in crushing.Design flaws in the fine crushing circuit continued to causesignificant downtime such that the overall capacity achieved Q1-Q22009 was limited to 4.0 million tonnes of ore, which was 53% of thepreviously budgeted amount. Temporary improvements in capacity wereachieved as a result of a series of amendments, but production levelsof the circuit could not be consistently improved. During Q2 2009 thedowntime was partly related to preparations for the installation ofthe expanded crushing circuit in August.In order to secure sufficient capacity in the long term and to catchup on the already incurred crushing delay, the Company decided toredesign the entire system and to acquire additional crushingequipment with expected availability for use in September 2009. Bythe end of June 2009, construction of the new crushing plant, whichis planned to increase the capacity from 15 million tonnes toapproximately 22 million tonnes annually, was well on its way and a2-3 week production stoppage for installation is being carried outduring August.The Company's primary crusher also experienced technical problems andperformed at less than budgeted capacity during the period.Corrective action was taken during the second quarter, as soon as thecapacity limitations became obvious. Problems in primary crushing arenot a rate limiting factor for overall production, however, ascontractor capacity is readily available.Bioheapleaching proceeded according to plan with the existing heapsupporting the metals recovery levels realised in the May productioncampaign. Heat generation in the heap has continued to be high,making temperature control through aeration and irrigation a criticaltask especially during the summer months.The metals recovery process was in operation for most of the month ofMay, producing approximately 12-14 tonnes of nickel and 29-30 tonnesof zinc per day. The produced volumes correspond well to the size andaverage age of the heap at the time. The total nickel and zinccontents in the Q1-Q2 2009 production were 224 tonnes and 538 tonnes,respectively. The quality of the products was good and continued toimprove throughout the production campaign with increasing experienceof the metals recovery process.At the end of Q2 2009, the Company estimates production ramp-upoverall to be delayed approximately 5 months from the originalramp-up plan.Due to the disproportionally high cost of materials handling relativeto metals recovery during the first half of 2009, the unit cost ofproduction during the period was not representative of the estimatedproduction costs in steady state operation.Production summary 2008 - Q2 2009 Q2 Q1 Q1-Q2 2008-09 2009 2009 2009MiningBlasted ore million tonnes 2.4 2.9 5.3 8.3Excavated waste million tonnes 0.9 1.0 1.8 3.2Materials handlingStacked ore million tonnes 2.1 2.0 4.0 6.5BioheapleachingOre in primary heapat end of period million tonnes 6.5 4.4 6.5 6.5Metals recoveryNickel sulphide production dry metric tonnes 402 58 460 460Nickel metal content tonnes 198 26 224 224Zinc sulphide production dry metric tonnes 794 460 1,254 1,254Zinc metal content tonnes 538 168 706 706Research and developmentTalvivaara continued active studies relating to manganese recoveryfrom the leach solution. Other ongoing research and developmentprojects related to optimisation of the bioheapleaching technology,chemical and biological iron removal from leach solution, andutilisation of gypsum residue.Environment, health and safetyThe Company continued its environmental management and monitoringprogramme in accordance with the requirements set out in itsEnvironmental Permit. Some temporarily decreased pH levels andincreases in suspended solids and metal contents in downstream watershave been detected and such deviations have been reported to theenvironmental authorities. Any deviations have been followed byincreased level of monitoring until all parameters have returned topermitted levels.Dust emissions from the mining area have also occasionally exceededpermitted levels, primarily due to contractor fine crushing which wasperformed outdoors during the early part of 2009 to increase theoverall crushing capacity. Since the discontinuation of contractorfine crushing at the end of March the dust emissions havesubstantially decreased, but the Company continues to focus ondecreasing the dust levels further.Talvivaara is in the process of preparing its environmental processesto meet the ISO 14001 environmental standard. Audit of theenvironmental system is targeted for Q4 2010.No environmental compensations were paid during the reporting period.The environmental security placed for future rehabilitation of thearea amounted to EUR 15.3 million on 30 June 2009. Of the total, EUR9 million was covered by bank guarantees and guarantee insurance, andEUR 6.3 million was deposited in escrow accounts.Occupational safety is one of Talvivaara's key focus areas. Thesafety record remained good during the reporting period with threerelatively minor Lost Time Injuries (LTI's) reported among theCompany's personnel in January 2009 and none since the start of theWork Group Safety Challenge in February 2009. The overall safetyrating at the end of the period was 12 LTI's per million man hours.Legal and permitting mattersThe name of the Company's operating subsidiary was changed fromTalvivaara Project Ltd. to Talvivaara Sotkamo Ltd. The new companyname was registered in the Finnish Trade Registry on 16 June 2009.The appeal pending at the Supreme Administrative Court against thedecision by the Ministry of Employment and Economy regarding theextension of the area covered by the existing mining license wascancelled in April. Thereby the extension of the mining license areabecame final and binding on 14 April 2009. Concurrently, the appealagainst the compensations awarded in the land surveying andredemption proceedings pending at the Land Court of Rovaniemi wascancelled, making the compensation awards final and binding as of 16April 2009.PersonnelTalvivaara employed an average of 268 employees during the first halfof 2009 (Q1-Q2 2008: 133). At the end of June 2009 the number ofemployees was 276, while the corresponding number was 239 at the endof 2008 and 191 at the end of June 2008. Wages and salaries paidduring the period totalled EUR 6.9 million (Q1-Q2 2008: EUR 3.5million).Shares and shareholdersThe issued share capital of the Company on 30 June 2009 was222,896,718 and (assuming share issues in relation to the convertiblebond of May 2008 and option scheme of 2007) the fully diluted issuedshare capital of the Company was 241,391,018. A further share issueoccurred 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 theshares and votes of the Company were Pekka Perä (25.6%), Varma MutualPension 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 HelsinkiStock Exchange (Nasdaq OMX Helsinki Ltd) on 11 May 2009.Risks and uncertaintiesTalvivaara carries out an ongoing process endorsed by the Board ofDirectors to identify risks, measure their impact against certainassumptions and implement the necessary proactive steps to managethese risks. Talvivaara's operations are affected by various riskscommon to the mining industry, such as risks relating to thedevelopment of Talvivaara's mineral deposits, and volatility ofcommodities prices and currency exchange ratios.In the short term, Talvivaara's operational risks relate primarily tothe installation and commissioning of the redesigned and expandedcrushing circuit and the ramp-up schedule of the overall operations.Because of uncertainties relating to the materials handlingprocesses, Talvivaara has previously withdrawn its production targetsfor the current year and is taking measures to secure 2010 productionat the targeted level of approximately 30,000 tonnes of nickel.The market price of nickel has recovered significantly over the past3-4 months. In light of the available data particularly on industrialdemand of nickel in the Western economies, the recent price increasemay in the Company's view have exceeded the fundamental drivers andmay not be sustainable in the short term. For the short and mediumterm, Talvivaara has executed significant hedges against low nickeland zinc prices. In the long term, Talvivaara believes its operationsto also be profitable at substantially lower nickel prices than thepresent market prices of USD 19,000-20,000 per tonne.Talvivaara's revenues are almost entirely in US dollars, whilst themajority of the Company's costs are incurred in Euro. Potentialstrengthening of the Euro against the US dollar could thus have amaterial adverse effect on the business and financial condition ofthe Company. Talvivaara's existing currency hedges have been executedto partly mitigate this through the end of 2010 and the Companyanticipates hedging against currency exchange volatility also goingforward.Events after the reporting periodClosing of the equity placing announced on 2 June 2009An Extraordinary General Meeting of the Company Plc held on 6 July2009 resolved to approve the proposal of the Board of Directors for ashare issue of 22,280,000 new shares on a non pre-emptive basis. Thenew shares, which had been placed and allocated in an acceleratedbook-building process on 2 June 2009, were registered in the FinnishTrade Register on 7 July 2009 and dealings in the new shares on theLondon Stock Exchange's main market and on the official list of theHelsinki Stock Exchange commenced on 8 July 2009.Production stoppage for installation of redesigned and expandedcrushing circuitThe production stoppage affecting all production processes exceptbioheapleaching commenced on12 August 2009 as planned. The installation work has since progressedon or ahead of schedule and re-start of all processes, includingcommissioning of the new crushing circuit, is expected in thebeginning of September.Continued modification of primary crusherAdditional modifications to the primary crusher have been made sinceend June 2009 and are anticipated to continue until mid Q4 2009 inorder to get the capacity of the system up to the specified level. Inthe meantime, contractors are engaged to provide sufficient primarycrushing capacity to meet the fine crushing capacity of the expandedcircuit.Capital expenditure related to capacity expansionCritical long-lead items, notably additional hydrogen capacity andmining fleet, have been ordered after the closing of the equityplacing and are expected to be delivered in time for the capacityexpansion to proceed in the planned timetable.Factoring of sales receivablesTalvivaara has entered into an agreement with a Finnish financialinstitution for the factoring of sales receivables from the Company'snickel and cobalt products.Short-term outlookFollowing the anticipated commissioning of the expanded crushingcircuit and restart of all production processes in early September,Talvivaara expects to continue its production ramp-up targeted ateventually achieving up to 50,000 tonnes in annual nickel productionin 2012. While production guidance for 2009 has been withdrawn as aresult of technical issues in materials handling, the Companyreiterates its production target of approximately 30,000 tonnes ofnickel in 2010.The Company does not anticipate its production plans to be affectedby commodity prices. Following the successful closing of its equityplacing in July, Talvivaara believes it has sufficient liquidity tocover the cost of capacity expansion, expected to be incurred mostlyin 2009 and 2010.Change in financial reportingAs a consequence of its secondary listing in Helsinki in May 2009,the Company is now required to issue financial reports quarterly. Thequarterly 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 toEUR '000) 30 Jun 09 30 Jun 08 30 Jun 09 30 Jun 08 31 Dec 08Turnover 1,652 - 1,778 - -Other operatingincome 6,296 4,310 25,553 9,166 29,810Changes ininventoriesof finished goodsandwork in progress 17,795 - 32,077 - 24,006Materials andservices (13,869) (981) (27,504) (1,521) (20,407)Employee benefitexpenses (4,282) (2,633) (8,065) (4,127) (8,910)Depreciation,amortization,depletion andimpairment charges (8,351) (114) (16,219) (197) (5,756)Other operatingexpenses (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 9,219Finance cost (7,201) (1,409) (13,797) (2,115) (12,956)Finance cost (net) 7,261 594 (6,784) 170 (3,737)Loss before incometax (2,867) (2,629) (14,689) (4,451) (8,033)Income tax expense 507 (1,375) 3,491 (1,532) 13,865Profit (loss) forthe period (2,360) (4,004) (11,198) (5,983) 5,832Attributable to:Equity holders ofthe Company (1,943) (2,552) (9,105) (3,962) 7,042Minority interest (417) (1,452) (2,093) (2,021) (1,210) (2,360) (4,004) (11,198) (5,983) 5,832Earnings per share for profit(loss) attributable to theequity holders of theCompany (expressed in ? pershare)Basic and diluted (0.04) (0.02) (0.04) (0.02) 0.03CONSOLIDATED 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 08Profit (loss) for theperiod (2,360) (4,004) (11,198) (5,983) 5,832Other comprehensiveincome, items net oftaxAvailable-for-salefinancialassets - (513) - (451) (451)Cash flow hedges (54,573) 14,018 (47,367) 10,306 90,414Other comprehensiveincome, net of tax (54,573) 13,505 (47,367) 9,855 89,963Total comprehensiveincome (56,933) 13,505 (58,565) 3,872 95,795Attributable to:Equity holders of theCompany (45,602) 8,150 (46,999) 3,832 78,922Minority interest (11,331) 1,351 (11,566) 40 16,873 (56,933) 9,501 (58,565) 3,872 95,795CONSOLIDATED STATEMENT OF FINANCIAL POSITION(all amounts in EUR '000) Unaudited Audited Unaudited 30 Jun 09 31 Dec 08 30 Jun 08ASSETSNon-current assetsProperty, plant and equipment 590,486 552,459 301,585Biological assets 6,503 8,152 8,354Intangible assets 7,586 7,774 7,301Derivative financial instruments 60,141 116,004 26,303Other receivables 11,449 9,635 18,637 676,165 694,024 362,180Current assetsInventories 66,514 31,691 -Trade receivables 1,823 - -Other receivables 13,978 24,721 20,441Derivative financial instruments 41,875 40,805 3,741Cash and cash equivalent 24,259 82,713 74,117 148,449 179,930 98,299Total assets 824,614 873,954 460,479EQUITY AND LIABILITIESEquity attributable to equity holdersof the parentShare capital 80 80 80Share premium 8,086 8,086 8,086Other reserves 335,273 334,019 333,072Hedge reserve 34,438 72,332 8,245Retained earnings (35,206) (26,101) (37,106) 342,671 388,416 312,377Minority interest in equity 23,904 35,470 18,630Total equity 366,575 423,886 331,007Non-current liabilitiesBorrowings 420,896 367,955 72,955Trade payables - - 3Other payables - - -Derivative financial instruments 2,801 1,985 912Deferred tax liabilities 2,938 23,070 10,322Provisions 959 944 9 427,594 393,954 84 201Current liabilitiesBorrowings 780 224 25Trade payables 20,646 45,283 40,606Other payables 7,587 8,294 4,545Derivative financial instruments 1,432 2,279 61Provisions - 34 34Current income tax liabilities - - - 30,445 56,114 45,271Total liabilities 458,039 450,068 129,472Total equity and liabilities 824,614 873,954 460,479CONSOLIDATED 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 08Cash flows fromoperating activitiesProfit (loss) forthe period (2,360) (4,004) (11,198) (5,983) 5,832Adjustments forTax (507) 1,375 (3,491) 1,532 (13,865)Depreciation andamortization 8351 114 16,219 197 5,756Other non-cash incomeand expenses 1,187 (554) 2,724 1,508 4,780Interest income (14,462) (2,003) (7,013) (2,285) (9,219)Fair value gains onfinancial assets atfair value throughprofit 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 workingcapitalDecrease(+)/increase(-)in other receivables (11,640) 12,226 6,781 3,298 4,552Decrease (+)/increase(-)in inventories (20,934)) - (34,718) - (30,661)Decrease(-)/increase(+)intrade and otherpayables 3,926 15,505 (25,855) 16,516 23,773Change in workingcapital (28,648) 27,731 (53,792) 19,814 (2,336) (18,972) 21,813 (50,944) 12,297 (20,892)Interest and otherfinancecost paid (7,571) (3,129) (11,554) (3,686) (7,468)Interest income 388 438 3,378 455 9,581Net cash used inoperating activities (26,155) 19,122 (59,120) 9,066 (18,779)Cash flows frominvesting activitiesPurchases of property,plant and equipment (27,985) (104,915) (57,660) (171,757) (427,187)Purchases of biologicalassets - - (35) (26) (26)Purchases of intangibleassets (35) (97) (42) (1,119) (1,873)Proceeds from sale ofproperty, plant andequipment - - 9 - -Proceeds from sale ofintangible assets 49 - 49 - -Proceeds from sale ofbiological assets - 127 - 127 707Proceeds fromgovernmentgrant related totangible assets 5,000 - 5,000 - -Proceeds fromgovernmentgrant related tointangible assets - - 13 - 203Proceeds from sale ofavailablefor sale financialassets - 26,356 - 26,356 26,356Purchases of derivativefinancial instruments - - (1,371) (1,371)Proceeds from sale ofderivativefinancial instruments - 661 - 1,440 -Purchases of financialassets at fair valuethrough profit or loss - - - - 1,440Net cash used ininvestingactivities (22,971) (77,868) (52,666) (146,350) (401,751)Cash flows fromfinancing activitiesProceeds from shareissuenet of transactioncosts - - - - -Share premium - - - - -Proceeds from interestbearing liabilities 52,988 84,900 53,357 84,900 396,734Payment of interestbearing liabilities (25) - (25) - (20,000)Capital investment byminority shareholders - - - - 8Net cash generated infinancing activities 52,988 84,900 53,332 84,900 376,742Net (decrease)/increaseincash and bankoverdrafts 3,837 26,154 (58,454) (52,384) (43,788)Cash and bankoverdrafts atbeginning of the period 20,422 47,963 82,713 126,501 126,501Cash and bankoverdraftsat end of the period 24,259 74,117 24,259 74,117 98,299CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY(all Share Share Invested Other Hedge Retained Total Mino- Totalamounts capi- premium unrestric- reser- reserve ear- rity equityin EUR tal ted ves nings inte-'000) equity restBalance 16 8 086 320 671 1 106 - -33 423 296 18 315at 456 591 0471 Jan 08Total - - - (451) 8 245 (3 962) 3 832 39 3 871compre-hensiveincome for1-6/2008Transfers 64 - (64) - - - - - -withinequity,change of thecorporateformIssue of - - - - - - - - -newsharesEmployeeshareoptionscheme- value of - - - 914 - - 914 - 914employeeservicesConvertiblecapital loan- conversion - - - - - - - - - intosharesConvertiblebond- conversion - - - - - - - - -intosharesConvertible - - - 10 896 - - 10 - 10 896bond, 896equitycomponentRestatement - - - - - 278 278 - 278to capitalexpenditure,whichrelates topreviousyearMinority - - - - - 1 1 - 1interestarisingfromsubsidiaryBalance at 80 8 086 320 607 12 465 8 245 (37 106) 312 18 33130 June 377 630 0072008Balance at 80 8 086 320 607 13 412 72 332 (26 101) 388 35 42331 Decem- 416 470 886ber 2008Balance at 80 8 086 320 607 13 412 72 332 (26 101) 388 35 4231 Janu- 416 470 886ary 2009Fair value - - - - - - - - -changesnet of taxonavailable-for-salefinancialassetsTotal - - - - (37 (9 105) (46 (11 (58compre- 894) 999) 566) 565)hensiveincomefor 1-6/2009Transfers - - - - - - - - -withinequity,changeof thecorporateformConvertible - - - - - - - - -bond,equitycomponentEmployeeshareoptionscheme- value of - - - 1 254 - - 1 254 - 1 254employeeservicesRestate- - - - - - - - - -ment tocapitalexpendi-ture, whichrelates tolast yearBalance at 80 8 086 320 607 14 666 34 438 (35 206) 342 23 36630 June 671 904 5752009NOTES1. Basis of preparationThis Interim Consolidated Financial Statement has been prepared incompliance with IAS 34.The interim financial information set out herein has been prepared onthe same basis and using the same accounting policies as were appliedin drawing up the Group's statutory financial statements for the yearended 31 December 2008, added with the following changes.Revenue recognitionRevenue is recognized, net of treatment charges, foreign exchangegains and losses resulting from the settlement and any applicablesales taxes, from a sale when evidence of an arrangement exists, theprice is determinable, the product has been delivered, the title hasbeen transferred to the customer and collection of the sales price isreasonably assured. Most sales are being priced in US dollars and asdelivered duty unpaid (d.d.u.).A large proportion of Group production is sold under long termcontracts, but sales revenue is only recognised on individual saleswhen persuasive evidence exists that all of the following criteriaare met:- all material risks and rewards of ownership have been transferredto the buyer;- there is no continuing managerial involvement to the degreeusually associated with ownership or effective control over goodssold;- the amount of revenue can be measured reliably;- the costs incurred or to be incurred in respect of the sale canbe measured reliably; and- the flow of future economic benefits is probable.Most products are "provisionally priced", i.e. the sales price issubject to final adjustment at the end of a quotational period. Thequotational period is a time frame during which the final sales priceis determined. The principal risks associated with recognition ofsales on a provisional basis include metal price fluctuations betweenthe date initially recorded and the date of final settlement. If asignificant decline in metal prices occurs between the provisionalpricing date and the final settlement date, it is reasonably possiblethat the Group could be required to return a portion of the salesproceeds received based on the provisional invoice.Sales are initially recorded based on 100% of the provisional salesprices. Until final settlement occurs, adjustments to the provisionalsales prices are made to take into account the mark-to-market changesbased 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 bemeasured reliably for those products, for which there exists anactive and freely traded commodity market such as the London MetalsExchange. The marking to market of provisionally priced salescontracts is recorded as an adjustment to sales revenue. For changesin metal quantities upon receipt of new information and assay, theprovisional sales quantities are adjusted as well.Inventories(all amounts in EUR '000) Unaudited Audited 30 Jun 09 31 Dec 08Raw materials and consumables 8,353 6,655Ore on leach pads 45,073 22,965Work in progress 10,575 1,041Finished products 435 -Advance payments 2,078 1,030Inventories total 66,514 31,6912. Derivative financial instrumentsFair values of the derivative financial instrumentsDerivative financialinstrumentsFair values of thederivative Unaudited Auditedfinancial instruments 30 Jun 09 31 Dec 08(all amounts in EUR '000) Assets Liabilities Assets LiabilitiesNickel forwards-cash flowhedges 69,899 - 135,355 -Nickel forwards-held fortrading 10,719 - 3,301 -Zinc forwards-held fortrading 8,181 - 18,153 -Interest rate swaps-heldfor trading - 2,801 - 2,279Currency forwards-held fortrading 13,217 209 - -Currency options-held fortrading - 1,223 - 1,985Total 102,016 4,233 156,809 4,264 Unaudited Audited 30 Jun 09 31 Dec 08 Assets Liabilities Assets LiabilitiesDerivative financialinstruments 102,016 4,233 156,809 4,264Total 102,016 4,233 156,809 4,264Less non-current portionNickel forwards -cash flowhedges 48,904 - 101,797 -Nickel forwards-held fortrading - - - -Zinc forwards-held fortrading 4,856 - 14,207 -Interest rate swaps-heldfor trading - 2,801 - 1,985Currency forwards-held fortrading 6,381 - - -Currency options-held fortrading - - - -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 TotalNickelforwards- cashflowhedges,intonnes 2,451 9,989 12,440 3,429 12,128 15,557Nickelforwards- heldfortrading,intonnes 2,303 - 2,303 404 - 404Zincforwards- heldfortrading,intonnes 12,486 23,622 36,108 7,458 30,559 38,017Interestrateswaps -held fortrading,in EUR - 36,636,000 36,636,000 - 36,636,000 36,636,000Currencyforwards-held fortrading,in GBP 51,800,000 - 51,800,000 - - -Currencyforwards-held fortrading,in USD 127,375,000 64,062,500 191,437,500 - - -Currencyoptions- heldfortrading,in USD 112,000,000 - 112,000,000 209,800,000 - 209,800,000 Borrowings Carrying mount Fair value (allamounts inEUR '000) Unaudited Audited Unaudited AuditedNon-current 30 Jun 09 31 Dec 08 30 Jun 09 31 Dec 08Capitalloans 1,405 1,405 1,405 1,405ProjectTerm LoanFacility 226,404 229,935 226,404 229,935SeniorUnsecuredConvertibleBonds 74,149 72,842 74,149 72,842RailwayTerm LoanFacility 30,323 25,461 30,323 25,461Workingcapitalloan 44,372 - 44,372 -Financeleaseliabilities 4,829 1,694 4,829 1,694InterestSubsidyLoans 4,184 4,182 4,184 4,182Other 35,229 32,436 35,229 32,436 420,895 367,955 420,895 367,955CurrentFinanceleaseliabilities 781 199 781 199Other - 25 - 25 781 224 781 224Totalborrowings 421,676 368,179 421,676 368,179KEY 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 08Operatingprofit EUR(loss) '000 (10 128) (3 223) (7,905) (4 621) (4 296)Return onequity -0.6 % -1.3 % -2.8 % -1.9 % 1.6 %Equity-toassets ratio 44 % 72 % 44 % 72 % 49 %Net interest EURbearing debt '000 397 417 (21 602) 397 417 (21 602) 285 467Debt-toequityratio 108,4% -6,5% 108,4% -6,5% 67,3%Capital EURexpenditure '000 28 020 105 012 57 737 172 902 429 086Research &development EURexpenditure '000 0 0 0 62 181Property,plant and EURequipment '000 590 486 301 585 590 486 301 585 552 458Derivativefinancial EURinstruments '000 97 783 29 071 97 783 29 071 152 545 EURBorrowings '000 421 676 72 930 421 676 72 930 368 179Cash andcashequivalentsat the end EURof 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 toShare-related 30 Jun 31 Deckey figures 30 Jun 09 30 Jun 09 30 Jun 09 08 08Earnings pershare EUR (0.01) (0.01) (0.04) (0.02) 0.03Equity pershare EUR 1.54 1.40 1.54 1.40 1.74Developmentof shareprice atLondonStockExchangeAveragetradingprice1 EUR 3.36 5.05 3.01 4.69 3.64 GBP 2.95 4.01 2.69 3.64 2.90Lowesttradingprice1 EUR 2.26 4.66 1.44 3.61 1.22 GBP 1.99 3.70 1.29 2.80 0.98Highesttradingprice1 EUR 4.69 5.66 4.61 5.79 5.64 GBP 4.12 4.49 4.12 4.49 4.49Tradingprice atthe end ofthe period2 EUR 3.99 4.66 3.99 4.66 1.25 GBP 3.40 3.70 3.40 3.70 1.19Changeduring theperiod 56.5 % -2.8 % 185.7 % 23.2 % -60.3 %Marketcapitalizationat the endof the EUR 1 039period3 '000 889 390 1 039 575 889 390 575 278 475 GBP '000 757 849 823 603 757 849 823 603 265 247Developmentin tradingvolumeTrading 1000volume shares 65 151 21 131 83 504 38 769 84 780In relation toweightedaveragenumber ofshares 29.2 % 9,5 % 37.5 % 17.4 % 38.0 %Developmentof shareprice at OMXHelsinkiAveragetrading price EUR 3.97 3.97Lowesttrading price EUR 3.05 3.05Highesttrading price EUR 4.85 4.85Trading priceat theend of theperiod EUR 4.05 4.05Changeduringthe period 0.29 29.4 %Marketcapitalizationat the end of EURthe period '000 902 732 902 732Developmentin tradingvolumeTrading 1000volume shares 41398 41 398In relation toweightedaveragenumber ofshares 18.6 % 18.6 %Adjustedaveragenumber of 222 896 222 896 222 896 222 896 222 896shares 718 718 718 718 718Number ofshares atthe end of 222 896 222 896 222 896 222 896 222 896the period 718 718 718 718 7181) Trading price is calculated on the average of EUR/GBPexchange rates published by the European Central Bank during theperiod2) Trading price is calculated on the EUR/GBP exchange ratepublished by the European Central Bank at the end of the period3) Market capitalization is calculated on the EUR/GBP exchangerate published by the European Central Bank at the end of the periodEmployee-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 '000Wages andsalaries 3,581 2,200 6,850 3,525 5,756Average numberof employees 272 165 268 133 178Number ofemployees at theend of the period 276 191 276 191 239 Three Three Six Six Twelve months to months to months to months to months toOther figures 30 Jun 09 30 Jun 08 30 Jun 09 30 Jun 08 31 Dec 08Share optionsoutstanding atthe end of theperiod 4,442,500 2,285,000 4,442,500 2,285,000 4,442,500Number of sharesto be issuedagainstthe outstandingshare options 4,442,500 2,285,000 4,442,500 2,285,000 4,442,500Rights to vote ofshares to beissued againstthe outstandingshare options 2.0 % 1.0 % 2.0 % 1.0 % 2.0 %Key financial figures of the GroupReturn on equity Profit (loss) for the period (Total equity at the beginning of period + Total equity at the end of period)/2Equity-to-assets ratio Total equity Total assets Interest-bearing debt - Cash and cashNet interest-bearing debt equivalentDebt-to-equity ratio Net interest-bearing debt Total equityShare-related key figures Profit (loss) attributable to equityEarnings per share holders of the Company Adjusted average number of shares Equity attributable to equity holders ofEquity per share the Company Adjusted average number of shares Number of shares at the end of theMarket capitalization at the period * trading priceend of the period at the end of the period[1] At EUR/GBP exchange rate of 0.8612 on 6 July 2009, as applied to73% of the issue which was subscribed and paid in GBP.This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 27.08.2009 - 08:01 Uhr
Sprache: Deutsch
News-ID 5150
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"Talvivaara Mining Company Plc Half Interim Report January-June 2009"
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