Corporate and Strategic Update

Transcription

1 Corporate and Strategic Update Pekka Perä, CEO 4 December 2008

2 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

3 Introducing the Talvivaara team Pekka Perä, Chief Executive Officer Saila Miettinen-Lähde, Chief Financial Officer Lassi Lammassaari, Chief Operations Officer Pekka Erkinheimo, Chief Commercial Officer Marja Riekkola-Vanhanen, Chief Technology Officer Jukka Pitkäjärvi, Chief Geologist Leif Rosenback, Chief Metallurgist Tapio Hyödynmaa, General Manager Metals Recovery Rene Basilier, Commercial Manager Kary Vyhtinen, Commercial Manager Timo Laatio, Investor Relations Outi Kärkkäinen, Executive Assistant 2

4 Company overview Internationally significant base metals producer with primary focus on nickel and zinc Estimated mine life of around 40+ years Anticipated steady state metal production Nickel 33,000 tonnes p.a. Zinc 60,000 tonnes p.a. Copper 10,000 tonnes p.a. Cobalt 1,200 tonnes p.a. Talvivaara will supply 2.3% of present world annual nickel production by 2010 Listed on London Stock Exchange Main Market since June 2007 Included in FTSE 250 London TALVIVAARA Sotkamo Oslo Helsinki Stockholm Copenhagen Hamburg Berlin 3

5 Key project milestones Company Foundation Talvivaara deposits discovered in 1977 by Geological Survey of Finland and held by Outokumpu Deposits extensively explored and their metallurgy studied by Outokumpu in the 1980 s and early 1990 s Deposits and related research data acquired by Talvivaara in February 2004 Project close to completion First blast ceremony in April 2008, marking the beginning of the extraction of ore Start of crushing, stacking and bioheapleaching in July 2008 First metal sulphide produced on 1 October 2008 Commercial grade and scale production commences Q as planned Company incorporated Acquisition of concessions, exploration and research data 17,000 tonne on site biohepleaching trial Submission EIA report 7m financing Application for Environmental Permit 33m financing Complete BFS, receive Environmental Permit $320m committed Term Loan facility 302m IPO First operational blast of ore 85m convertible issued Start up: first metal sulphide production Commercial grade and scale production Start of stacking and bioheapleaching New rail link operational Full scale production Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q

6 Latest developments and short term objectives 1(2) Production Mine production proceeding according to plan Materials handling (crushing) anticipated to reach planned capacity in Q1/2009 Metals recovery plant ramping up; full capacity to be reached in Q1/2010 Personnel Safety Present manning levels sufficient Recruiting good availability of quality people Continuously in focus Frequency of lost-time-injuries 11 / 1 million working hours substantially below industry average Number of personnel Talvivaara personnel e Nov

7 Latest developments and short term objectives 2(2) Permitting Finance Supreme Administrative Court rejected all appeals on the Environmental Permit in November 2008 Environmental Permit now final and binding Moderate capex overrun due to late stage scope changes in metals plant (piping) and cost escalations in earth works Expected cash at year end approx. EUR 90 million Metal hedges well in the money Short term objectives Crushing capacity ramp-up Metals production ramp-up Maintain good cash position 6

8 The fundamentals - Talvivaara s keys to success 1. Huge resource One of the largest known sulphide nickel resources Very low stripping ratio Exploration potential 2. Technological superiority Low cost heap leaching method Advanced metals precipitation method State-of-the-art metals recovery plant Experienced staff 3. Global demand Global demand will pick up eventually Cut backs are decreasing supply Long term growth drivers intact 7

9 The fundamentals 1. world-class asset One of the largest known sulphide nickel deposits in Europe and a major polymetallic resource Commercially significant amounts of copper, cobalt and zinc Easy and cost-effective to mine as large open pits; minimal overburden Huge exploration potential resource update proves the point Significant exploration potential 8

10 The fundamentals 2. Cost advantages of Talvivaara Location of selected upcoming projects Talvivaara 30,000 (tpa) Caldag 19,000 (tpa) Kabanga 32,000 (tpa) Capital cost $000s per annual tonne of Nickel Sulphide ores Laterite ores 30 Barro Alto 33,000 (tpa) Koniambo 60,000 (tpa) 20 Vermelho 46,000 (tpa) Ambatovy 60,000 (tpa) Goro 60,000 (tpa) Sulphide Operations HPAL Ferronickel Nickel Pig Iron Munali Avebury Ban Phuc Eagle Bucko Lake Santa Rita Sherlock Bay Kevitsa Nornico Caldag Talvivaara Yakabindi Schevchenko Buruktal Honeymoon Kabanga Pohang Ramu Onca Puma Shakespeare Sheba Ridge Kalgoorlie Syerston Vermelho Las Lynn Lake Halmahera Fenix San Felipe Mindoro Barro Alto Gag Island Nonoc Koniambo Ambatovy Goro Sipilou Ravensthorp North Met Honeymoon Well 42,500 (tpa) Kalgoorlie 47,000 (tpa) Ravensthorpe 48,000 (tpa) Source: Merrill Lynch Research 2010E Cash Cost ($/lb) Cash cost ($/lb) % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1 Talvivaara 2010 estimated cash cost $2.6/lb assuming Zn by-product credit at $0.56/lb 9 RAO Norlisk Canadian Royalties Talvivaara Mining CVRD Talvivaara General Nicke Mitsui & Co PT Aneka Tambang IFC Outokumpu Union del Nique Anglo Amnerican l BHP Billiton Western Areas NL Eramet Glencore Minara Resources Ltd First Nickel Inc Highlands pacific Ltd Mwana Africa Holdings Fox Resources Source: Brook Hunt, Company.

11 The fundamentals 3. Global demand will grow Steel Steel consumption consumption per per capita capita 1,200 US ( ) Japan ( ) S. Korea ( ) Taiwan ( ) China ( ) India (2005) 1, Kg steel/capita ,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 GDP/capita (PPP, Jan-06 $000s) Source: World Bank, OECD (GDP at Purchasing Power Parity), IISI 10

12 Strategy Execute development of the two deposits at Talvivaara Achieve planned annual output Achieve strong financial profile Maintain strong cash position Generate cash through production Maintain operating and capital cost discipline Longer term expansion following ramp-up of operations Increase capacity at Talvivaara Consider acquisitions Seek opportunities to utilise bioheapleaching technology Enhancement of metals processing facility To allow processing of challenging polymetallic concentrates from other sources Manganese recovery technology 11

13 Expansion at Talvivaara Expansion studies being revised due to new geological information Need to re-examine appropriate scale in view of targeted year mine life 50% expansion would cost less than 50 million Permit for expansion expected to be available New cash required from operations or from external sources for incremental development Kuusilampi 3km untested ground Kolmisoppi 12

14 Business development manganese production and autoclave investment Decisions on autoclave and manganese investments deferred due to the global economical situation Polymetallic Concentrates Autoclave investment Mine projects supplying the autoclave feed have been deferred Talvivaara is technically ready to make the decision any time Autoclave Heap CuS ZnS Manganese production Studies continue High quality manganese metal, manganese oxide and manganese sulphate can be produced Customers / partners difficult to engage due to the market conditions Solution Purification NiCoS MnO 13

15 Talvivaara s main objectives for Production 2. Production 3. Production 14

16 Financial Update Saila Miettinen-Lähde, Chief Financial Officer 4 December 2008

17 Talvivaara low cost producer in the low price environment Early experiences from production costs largely in line with expectations confirming low cost producer status Some positive surprises have been seen: Lower than anticipated sulphuric acid consumption Decreasing prices of sulphur, sulphuric acid, electricity and certain other raw materials Expenditure dominated by variable costs 20% / 80% fixed-to-variable ratio in 2009, decreasing to 10% / 90% by 2011 Materials handling slightly behind schedule, resulting in revised 2009 production target of 15,000-18,000 tonnes of nickel vs. the original estimate of approx. 20,000 tonnes Production targets for 2010 and beyond remain unchanged Capex moderately increased due to certain metals plant scope changes and higher than expected earth works costs Production control room 1

18 Operational expenditure G&A 5% Mining 19% Maintenance 7% Leasing 8% Other 2% Contracting 18% Metals recovery 35% Electricity 7% Fuel 3% Labour 6% Materials handling 32% Consumables 14% Bioheapleaching and water management 9% Chemicals 35% 2009 Opex estimated at approx. EUR million depending on level of production (15,000 18,000 t Ni) 1 Steady state Opex estimated at approx. EUR million p.a. depending on level of waste mining Working capital in range of EUR million assuming factoring of receivables 1 Excluding treatment charge 2

19 Competitive cash cost of production Average cash cost : 4.1/lb nickel ($ 5.1/lb) 2010: 2.1/lb nickel ($ 2.6/lb) 2011: 1.7/lb nickel ($ 2.1/lb) Higher unit cost in 2009 due to Disproportionally high mining and materials handling cost during ramp-up Learning curve in operations EUR/lb Cash cost of production (EUR/lb nickel) By-product credits with the following assumptions: - Zn 0.45/lb ($ 0.56 /lb); net smelter return to Talvivaara 60% - Cu 0.68/lb ($ 0.85 /lb); net smelter return to Talvivaara 80% - Co 8.00/lb ($ /lb); net smelter return to Talvivaara 59% - /$ Dec-08 Jul-09 Jan-10 Aug-10 Feb-11 2 Including by-product credits and treatment charge 3

20 Capital expenditure update Moderate increase in Capex seen in Q due to Design and scope changes in final stages of metals plant construction (piping) Increased final invoicing of certain earth works contracts due to oil price escalations Increased cost of some earth works contracts due to worse than expected digging-to-excavation ratio Certain works for the second line of the metals plant having been carried out ahead of time during the fall Certain remaining Capex items rescheduled to 2010 in order to conserve cash in 2009 No effect on production volumes EUR million Feasibility study Actual Capex Targeted leasing Dec-08 Remaining Capex Committed leasing 4

21 Financing status Project term loan facility of USD 320 million Fully drawn down Estimated EUR amount million Cost overrun account of USD 35 million funded from equity and can be used to fund additional project costs as necessary Economic completion expected in mid 2010 followed by reduction of margin from 2.75% to 2.00% above LIBOR Typical project finance covenants Convertible note of EUR 85 million (May 2008) Strategic uses of proceeds (manganese production, autoclaves) deferred to conserve cash for 2009 Estimated cash at year end approx. EUR 90 million 5

22 Financial calendar 2009 Preliminary results March 2009 Annual General Meeting 28 April 2009 Interim Management Statement Jan-Apr April 2009 Interim results Jan-Jun August 2009 Interim Management Statement Jul-Oct October

23 Resource Update Jukka Pitkäjärvi, Chief Geologist, MAusIMM 4 December 2008

24 Significant increase in resources About 25,000 meters drilled since previous estimate in December 2007 Significant increase in total mineral resources (569 Mt -> 1,004 Mt) Exploration potential remains excellent Kuusilampi 3km untested ground Kolmisoppi 1

25 Identified mineral resources 2008 Resource increase as a result of infill drilling at the Kuusilampi deposit 40% increase in measured and indicated mineral resources to 642 Mt at 0.07% nickel cut-off 210% increase in inferred mineral resources to 362 Mt at 0.07% nickel cut-off No drilling has been carried out at the Kolmisoppi deposit Increase Category Mt Mt % Ni% Ni% Measured % Indicated % Subtotal % Inferred % Total 1, %

26 Kuusilampi long section looking west 3

27 Kuusilampi long section looking west 4

28 Kuusilampi cross section looking south 5

29 Kuusilampi and Kolmisoppi - long section looking west Kuusilampi 3km untested ground Kolmisoppi 6

30 Exploration potential Kolmisoppi Kuusilampi The profile follow-up-procedure was applied to the flight lines covering the area of 3 km south from Kuusilampi and 3 km north from Kolmisoppi.The image above depicts the potential targets plotted on the filtered aero-magnetics map. 7