TALV.L Share News (TALV)

It never rains but it pours at Talvivaara, the nickel and zinc mining group, which has lowered its production target for the year and posted an operating loss for the first half. The firm, which originally forecast 2012 nickel production of 25,000-30,000 tonnes (t), now expects to produce around 17,000 tonnes after being hampered by continued heavy rainfall, which led to a dilution effect from excessive water in circulation. In addition, the company had to bring forward scheduled maintenance after a fatality-related stoppage in April, which affected second quarter production significantly. Net sales in the six month period totalled €72.5m, compared to €104.1m the same period the previous year, hit by the weaker nickel price. Income was slightly weighted toward the second quarter. The firm generated an operating loss of €22.3m (2011 first half, or H1: €10.4m) leading to an overall loss of €32.4m compared to a loss of €5.5m the same period in 2011. Losses per share were down from €0.03 to €0.12. The nickel price has declined from around $21,000-22,000 per tonne in early 2012 to around $16,000 per tonne during the summer, primarily driven by macroeconomic uncertainty and weak stainless steel fundamentals, the firm said. During the first half Talvivaara produced 6,568t of nickel (H1 2011: 8,166t) and 14,576t on zinc (H1 2011: 14,005t), but plans to reach more than 25,000tpa of nickel during the fourth quarter of the year by gradually increasing the leach solution flow rate through the metals recovery plant over the coming weeks.In a statement the firm said: "Whilst excess water at the mine site has affected our production guidance, it has also impacted our mining operations such that we have had to mine lower-grade ore further away from primary crushing than originally planned. In order to avoid this inefficiency and to accelerate utilisation of the nickel inventories we already have in the heaps, we have decided to shift our focus from mining to primary heap reclaiming over the next 3-4 months. "During this time, we will also move the excess water from the open pit to the gypsum pond, which is now being enlarged. We expect this temporary shift in the production scheme to result in substantial savings, but do not foresee it affecting our metals production during the current year."The equity-to-assets ratio remained stable, down just 0.1 percentage point at 28.9%, while net interest bearing debt climbed from €417m to €475.6m. The debt-to-equity ratio fell from 128.2% to 125.8%. Capital expenditure was down by €0.2m at €35.3m, while the number of employees rose from 416 to 505. NR