Talvivaara Update - Saila Miettinen-Lähde, Talvivaara
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Talvivaara Update - Saila Miettinen-Lähde, Talvivaara

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Talvivaara Update

Talvivaara Update
Saila Miettinen-Lähde, Deputy CEO and CFO, Talvivaara Mining Company

Mining On Top: Helsinki
16-17 September 2013 | Helsinki

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Talvivaara Update - Saila Miettinen-Lähde, Talvivaara Talvivaara Update - Saila Miettinen-Lähde, Talvivaara Presentation Transcript

  • TALVIVAARA UPDATE MINING ON TOP: HELSINKI 17 SEPTEMBER 2013 Saila Miettinen-Lähde, Deputy CEO, CFO
  • 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. Talvivaara in brief 2. Operational review – turning a corner 3. Safety, sustainability and permitting 4. Financial review 5. Outlook 3
  • TALVIVAARA IN BRIEF • Significant base metals producer utilising advanced proven technologies • One of the largest known sulphide nickel deposits in Europe with a long mine life • Bioheapleaching has demonstrated to be a feasible and cost-effective technology following ramp-up Targeted full scale production* Nickel 50,000 tpa Zinc 90,000 tpa Copper 15,000 tpa Cobalt 1,800 tpa Uranium 350 tpa * Subject to receipt of all necessary permits 4
  • 5 Talvivaara mineral resources 2012 Kuusilampi 1,033Mt Kolmisoppi 1,020Mt Total 2,053Mt Kuusilampi Kolmisoppi Open pit Secondary heap Primary heap Metals recovery Gypsum pond 5
  • LONG-LIFE ASSET OF INTERNATIONAL SIGNIFICANCE 12,4 5.5 5.5 4.7 4.1 3.0 2.6 2.6 2.6 2.5 2.3 2.0 1.9 1.8 1.8 1.7 1.6 1.3 1.2 0,7 Taimyr(Norilsk) WedaBay (Eramet) Chineseasset,est. Indonesianasset, est. Cubanasset,est. Talvivaara Philippinoasset, est. MurrinMurrin (Glencore) CerroMatoso (BHP) SLN(Eramet) Kola(Norilsk) Soroako(PTInco) Koniambo(Xstrata) Goro(Vale) Tumagain(Hard Creek) Ravensthorpe(FQ) Ambatovy(Sherritt) OncaPuma(Vale) Ontario(Vale) Fenix(Solway) Estimated measured and indicated nickel contained resources, excluding inferred (million tonnes) Source: Public filings and industry estimates; selected mines 6 = Diversifieds Estimated production capacity by mine (ktpa nickel) 124 113 70 65 60 60 60 60 53 50 50 45 40 28 24 12 Taimyr(Norilsk) Kola(Norilsk) Soroako(PTInco) WedaBay (Eramet) SLN(Eramet) Koniambo (Xstrata) Goro(Vale) Ambatovy (Sherritt) OncaPuma(Vale) Talvivaara CerroMatoso (BHP) Tumagain(Hard Creek) MurrinMurrin (Glencore) Ravensthorpe (FQ) Fenix(Solway) Ontario(Vale)
  • INDUSTRY-LEADING CAPITAL EFFICIENCY Ambatovy (Sherritt) Goro (Vale) Koniambo (Xstrata) Barro Alto (Anglo American) Talvivaara* Onca Puma (Vale) Ravensthorpe (First Quantum) Santa Rita (Mirabela) Kevitsa (First Quantum) 0 5 10 15 20 25 30 35 40 45 50 2008 2009 2010 2011 2012 2013 2014 EstimatedCapex($/lbNiatfullcapacity) Year of first production Capital efficiency and production start-up of selected nickel projects Source: Public filings; Bubble size represents estimated ramped-up production *Talvivaara Capex intensity incorporates all historical Capex, and estimated remaining Capex required to reach capacity = Laterite = Sulphide Size of bubble represents estimated full capacity 7 World-class deposit Capex efficiency Profitability and growth Investment grade geography
  • TALVIVAARA PROCESS FLOWSHEET 8 Key challenges in 2012-13 • Water balance • Temporary suspension of mining • Slowing down of leaching process
  • 1. Talvivaara in brief 2. Operational review – turning a corner 3. Safety, sustainability and permitting 4. Financial review 5. Outlook 9
  • OPERATIONAL REVIEW – TURNING A CORNER • Production impacted by maintenance downtime and low metal grades in leach solution - Continued effect of excess water in older heaps • Successful re-start of ore production in May • Promising early leaching results with new ore • Extensive efficiency and productivity programme ongoing • Organisational changes 10 Nickel and zinc production (t) Q2 2013 Q1 2013 Q2 2012 FY 2012 Nickel 1,776 2,732 3,194 12,916 Zinc 4,465 3,128 6,686 25,867
  • EFFICIENCY AND PRODUCTIVITY PROGRAMME • Key elements of the programme - Operational efficiency and productivity - Organisational structure, roles and responsibilities - Clear plans and follow-up • 30 improvement levers identified; full-scale implementation on-going • Performance management process rolled out into entire organisation as an integral part of the programme 11 KAIVOS Heinäkuu 2013 Kustannusylitykset Juurisyy ja korjaavat toimenpiteet Omistaja Tuotantoa rajoittaneet tekijät Juurisyy ja korjaavat toimenpiteet Omistaja KUMULATIIVINEN TUOTANTO- JA KUSTANNUSEURANTA 2013-01 2013-02 2013-03 2013-04 2013-05 2013-06 2013-07 2013-08 2013-09 2013-10 2013-11 2013-12 Tuotanto (tonnia) Kuukausituotanto 100 100 100 100 100 100 100 Kumulatiivinen tuotanto 100 200 300 400 500 600 700 Kumulatiivinen tavoite 120 210 300 400 550 650 700 750 800 870 900 999 Erotus 20 110 200 300 450 550 600 Kustannukset (EUR / tonni, ilman leasingiä) Kuukausikustannukset 99 76 56 77 88 66 120 Kuukausibudjetti 88 88 88 88 85 85 85 83 83 83 83 83 Erotus -11 12 32 11 -3 19 -35 Kumulatiivisen kustannukset 99 175 231 308 396 462 582 Kumulatiivinen tavoite 88 176 264 352 437 522 607 690 773 856 939 1022 Erotus -11 12 32 11 -3 19 -35 KUSTANNUSTEN TARKEMPI EROTTELU Muutos Erotus budjettiin kEUR EUR/tonni EUR/tonni kEUR EUR/tonni EUR/tonni kEUR EUR/tonni Kaivos yhteensä 999 999 10 999 999 10 999 999 Ilman leasingiä 999 999 10 999 999 -5 999 999 Leasing 999 999 12 999 999 3 999 999 Poraus ja räjäytys 999 999 10 999 999 10 999 999 Palkat 999 999 10 999 999 -5 999 999 Koneet 999 999 12 999 999 3 999 999 Räjäytysaineet 999 999 -10 999 999 10 999 999 Lastaus ja kuljetus 999 999 10 999 999 10 999 999 Palkat 999 999 10 999 999 -5 999 999 Ajoneuvojen huolto 999 999 12 999 999 3 999 999 Polttoaineet 999 999 12 999 999 3 999 999 Renkaat 999 999 -10 999 999 10 999 999 Yleiskustannukset 999 999 10 999 999 10 999 999 Palkat 999 999 10 999 999 -5 999 999 ITja lisenssit 999 999 12 999 999 3 999 999 … 999 999 -10 999 999 10 999 999 OPERATIIVISET MITTARIT Poraus (metriä) Toteuma 99 76 56 77 88 66 120 Tavoite 88 88 88 88 85 85 85 83 83 83 83 83 Erotus -11 12 32 11 -3 19 -35 Nikkelitonnit kasalle (ton Ni) Toteuma 99 76 56 77 88 66 120 Tavoite 88 88 88 88 85 85 85 83 83 83 83 83 Erotus -11 12 32 11 -3 19 -35 Polttoainekulutus (litraa / tkm) Toteuma 99 76 56 77 88 66 120 Tavoite 88 88 88 88 85 85 85 83 83 83 83 83 Erotus -11 12 32 11 -3 19 -35 Renkaiden kulutus (rengasta / tkm) Toteuma 99 76 56 77 88 66 120 Tavoite 88 88 88 88 85 85 85 83 83 83 83 83 Erotus -11 12 32 11 -3 19 -35 Ajotapakoulutus 6kk sisään (%) Toteuma 99 76 56 77 88 66 120 Tavoite 88 88 88 88 85 85 85 83 83 83 83 83 Erotus -11 12 32 11 -3 19 -35 Gatekeeper-osuus (%) Toteuma 99 76 56 77 88 66 120 Tavoite 88 88 88 88 85 85 85 83 83 83 83 83 Erotus -11 12 32 11 -3 19 -35 Toteuma tukokuu 2013 Toteuma kesäkuu 2013 Budjetti kesäkuu 2013 Kommentit per kululaji 0 20 40 60 80 100 120 140 1 2 3 4 5 6 7 8 9 10 11 12 EUR/malmitonni Kaivoksenyksikkökustannukset(ilmanleasing) Kuukausikustannukset 0 200 400 600 800 1000 1200 1 2 3 4 5 6 7 8 9 10 11 12 Malmitonnia Kaivoksenkumulatiivinentuotanto Kumulatiivinen tuotanto Kumulatiivinen tavoite • EUR 100m cash impact expected in the next 12 mo. • Positive cash flow • Permanent change
  • ORGANISATIONAL CHANGES • Darin Cooper appointed COO from Sep. 2013 - BEng, Metallurgy, MBA - Successfully implemented several production and cost efficiency programmes in the mining and metals industries - Former employers include Nyrstar, Teck Metals, Hudson Bay Mining, Britannia Zinc • Co-operation consultations concluded in August - Reduction of headcount by 68 through terminations of employment and retirements - The employment of 96 employees with temporary contracts to terminate at the end of the agreed contract period without renewal 12 Darin Cooper, COO
  • SUCCESSFUL RE-COMMENCEMENT OF ORE PRODUCTION • Mining and materials handling operations resumed in mid-May, seven weeks ahead of plan 13 0 10 000 20 000 30 000 40 000 50 000 60 000 04/2011 08/2011 12/2011 04/2012 08/2012 12/2012 04/2013 Average daily ore production (t) – rolling 30 days
  • MINING AND MATERIALS HANDLING PRODUCING AT RECORD SPEED AND AT IMPROVED UNIT COSTS 0 1 2 3 4 5 6 7 Jan'12 Feb'12 Mar'12 Apr'12 May'12 Jun'12 Jul'12 Aug'12 May'13 Jun'13 Jul'13 14 Materials handling units costs (EUR / t ore) Jul-2013 level Ni tonnes to primary heap since re-start • Approx. 8,000t of nickel stacked between re-start of ore production and end of July • Record ore production level of 1.6Mt in July • Improved grade control • Improved unit costs across ore processes; especially optimised reclaiming process 0 1 000 2 000 3 000 4 000 5 000 May 2013 Jun 2013 Jul 2013 ->13rd May +25% +84% 2012 average per month
  • RECLAIMING BOTTLE-NECK REMOVED 0 50 000 100 000 150 000 200 000 250 000 300 000 01/2012 02/2012 04/2012 05/2012 07/2012 08/2012 10/2012 11/2012 01/2013 02/2013 04/2013 05/2013 06/2013 Weekly Q1'12 avg Q2'12 avg Q3'12 avg Since re-start avg Jul-13 avg 15 Weekly primary heap reclaiming (t) • Reclaiming process operating at planned capacity levels aided by process modifications and the addition of a jaw crusher unit
  • BIOHEAPLEACHING – LOW NICKEL GRADE IN SOLUTION, BUT SHOWING SIGNS OF TURNAROUND 16 0 5 10 15 20 25 30 35 40 45 50 04/13 05/13 06/13 07/13 08/13 Heap 1 Heap 2 Heap 3 Heap 4 Heap temperatures (°C) - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Average nickel grade in plant PLS feed (g/l)
  • ACCELERATED DE-WATERING OF OLD HEAPS • De-watering of older heaps slower than anticipated through Q2 2013 e.g. due to available pond volumes • De-watering now accelerating as a result of focused efforts to improve leaching performance; pond volumes now sufficient for solution removed from heaps 17
  • EARLY LEACHING RESULTS DEMONSTRATE VERY ACTIVE PROCESS START-UP OF NEW HEAP • Early leaching of fresh ore has been very promising; temperatures of circulating solution already exceeding 50°C - Exceeds corresponding performance of any previous heap historically • First new heap (primary heap no. 4) completed in the beginning of September • Fresh ore starting to contribute metals as precipitation phase is ending • Special attention is paid to securing efficient start-up of the new heaps 18 1 800 2 000 2 200 2 400 2 600 2 800 800 850 900 950 1 000 1 050 1 100 2.8. 3.8. 4.8. 5.8. 6.8. 7.8. 8.8. 9.8. 10.8. 11.8. 12.8. 13.8. Zn(mg/l) Ni(mg/l) Ni (mg/l) Zn (mg/l) Metals grades in new heap – starting to contribute metals
  • METALS RECOVERY – RECORD FLOW RATE AND CONTINUED STABILITY • Q2 2013 production impacted by - Scheduled maintenance stoppage of approx. 2.5 weeks in late May and early June - Capacity restrictions due to planned maintenance of hydrogen sulphide plants already from mid-April • Flow rate reached a record level of 1,650 m3/h in June • Metals plant operation stable throughout H1 2013 - Plant operation not anticipated to restrict production - Leach solution metal grade improvement to drive production volume increase 19 3 194 4 030 2 317 2 732 1 776 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Nickel production (t) 6 686 7 184 4 106 3 128 4 465 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Zinc production (t)
  • FLOW RATES AT THE METALS PLANT IMPROVING 20 - 300 600 900 1 200 1 500 1 800 01/11 03/11 05/11 07/11 09/11 11/11 01/12 03/12 05/12 07/12 09/12 11/12 01/13 03/13 05/13 07/13 Monthly average 2011 average 2012 average 2013 average Monthly average flow rate to the plant (m3/h) Average in June 2013 subsequent to plant maintenance 06/13
  • 1. Talvivaara in brief 2. Operational review – turning a corner 3. Safety, sustainability and permitting 4. Financial review 5. Outlook 21
  • SAFETY, SUSTAINABILITY AND PERMITTING Safety • Increased focus on further safety training across all departments • LTIs at 19.5 / million working hours at the end of Q2 2013 Sustainability • Focus continues to be on water management – Treatment and discharge of water has continued throughout H1 2013 • Gypsum pond leakage in April fully contained within the safety dams • Historical issues with odour and dust resolved Permitting • New water discharge permit received in May – Volume quota removed – Discharge flow rate restricted by Kalliojoki river flow rate; Talvivaara has submitted an appeal with respect to this permit condition • Decision on renewal of overall environmental permit and on environmental permit for uranium extraction expected before the end of 2013 22
  • APPROX. 3 MILLION M3 OF EXCESS WATERS DISCHARGED IN THE FIRST HALF OF 2013 23 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 01/2013 02/2013 03/2013 04/2013 05/2013 06/2013 07/2013 Cumulative 2013 water discharge (Mm3)• Treatment and discharge of excess waters from the mine area continued throughout H1 2013 • Discharge will continue within permitted limits, but risks already materially reduced 300 000 400 000 500 000 600 000 01/13 02/13 03/13 04/13 05/13 06/13 07/13 Primary heap pond volume Max. pond volume Primary heap solution volume (m3) 12-Feb discharge permit from Kainuu ELY 31-May environmental permit update from AVI
  • SIGNIFICANT REDUCTION IN ENVIRONMENTAL OBSERVATIONS FROM NEIGHBOURING RESIDENTS 24 0 5 10 15 20 25 30 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2011 2012 2013 Numberofobservations Odour Noise Vibration Dust Water Other
  • 1. Talvivaara in brief 2. Operational review – turning a corner 3. Safety, sustainability and permitting 4. Financial review 5. Outlook 25
  • Q2 2013 FINANCIAL RESULTS • Results reflect production levels and a depressed nickel price environment - LME nickel price below USD 14,000/t at the end of Q2 2013 • Q2 2013 key financials - Sales: EUR 13.0m - Operating loss: EUR (23.9)m - Capex: EUR 15.3m • Costs impacted by: - Water management - Metals plant maintenance - Re-commencement of ore production - Chemicals efficiency impact of low metals grade in solution 26 33.4 44.8 25.7 27.6 13.0 Q2… Q3… Q4… Q1… Q2… Net sales (EURm) -10.9 -4.3 -57.0 -20.0 -23.9 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Operating profit (EURm)
  • LIQUIDITY POSITION AND BALANCE SHEET 27 - 50 100 150 200 250 300 2013 2014 2015 2016 2017 2018 Other Finance lease liabilities Corporate revolver Senior unsecured bond Convertible bonds* WC (Finnvera) loans * Convertible bond maturity reflects accreted principal Debt maturity profile (EURm) Net interest-bearing debt (EURm) 476 515 564 530 410 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 • Financing transactions in H1 2013 significantly improved balance sheet and liquidity position - Gearing from 183% at year-end 2012 to 81% at the end of Q2 2013 - Net debt from EUR 564m at year-end to EUR 410m at the end of Q2 • Remaining EUR 77m convertible bond maturity repaid in May • Next material maturity in December 2015 (excluding RCF) • Cash at EUR 101.1m at the end of Q2 • Several significant initiatives to maintain liquidity as part of efficiency and productivity programme
  • 1. Talvivaara in brief 2. Operational review – turning a corner 3. Safety, sustainability and permitting 4. Financial review 5. Outlook 28
  • NICKEL MARKET – NEAR-TERM OUTLOOK CHALLENGING • Nickel price under significant pressure through H1 2013 - Declined from USD 18,000-19,000/t in early 2013 to below USD 14,000/t in the summer - Macro outlook and weak stainless steel market - Build-up of nickel inventories to a record level of more than 200,000t • Short-term outlook: - Near-term outlook remains challenging - Current price level considered unsustainable; restrictions of supply and positive macro developments may trigger upside movement 29 LME nickel price (USD/t) 10 000 15 000 20 000 25 000 30 000 01/11 05/11 09/11 01/12 05/12 09/12 01/13 05/13 LME nickel price (USD/t) and nickel stocks (kt) - 50 100 150 200 250 300 - 5 000 10 000 15 000 20 000 25 000 30 000 2008 2009 2010 2011 2012 2013 LME nickel stocks (t) LME nickel price (USD/t)
  • LONG-TERM TALVIVAARA STORY INTACT • Extensive sulphide nickel deposit with a long mine life • Favourable characteristics of the Talvivaara deposits • Cost-effective and scalable bioheapleaching technology • Demonstrated feasibility of using bioheapleaching to extract nickel • Long-term off-take agreements for nickel, cobalt, zinc and uranium • Attractive long-term supply-demand dynamics of the nickel industry • Experienced management team 30 • Long-term story intact – world-class ore body and cost efficiency following ramp-up • Short-term challenges being addressed and showing signs of success
  • THANK YOU! Q & A 31