TALV.L Share News (TALV)

Talvivaara Mining Company has given its investors some much-needed cheer after saying that it expects its fourth quarter production to improve over the levels seen in the third. However, the group warned that as a result of the "challenging water balance situation" it is currently experiencing, it believes it is unlikely that its full year 2012 production target of approximately 17,000t of nickel will be achieved.It recently announced a leakage in the gypsum pond at its mine site meaning that metals production is temporarily suspended. On Thursday Talvivaara reported third quarter net sales of €44.8m compared to €60.6m in the same period in 2011. In the nine months to the end of the third quarter sales totalled €117.3m (2011: €164.7m). Quarterly losses widened to €12.1m (Q3 2011: €3.4m) while nine month losses leapt to €44.5m (2011: €8.9m). Expenditure in the three month period totalled €32.5m (Q3 2011: 22.0m), the debt-to-equity ratio hit 140.6% (Q3 2011: 128.1%), while net interest bearing debt came in at €514.6m (Q3 2011: €410.2m). Chief Executive Officer Harri Natunen said: "In the third quarter, we continued our consistent work to gradually ramp up production, enhance stability and availability of processes and improve our environmental performance. Across all of these areas, we have seen continued positive development which gives us a high degree of confidence for the future. "In July, we achieved a record level of ore production despite the mining department sourcing ore from a more distant location than planned. The metals recovery plant operated steadily throughout most of the third quarter, and in September reached an average monthly flow rate of 1,447 m3/h excluding an unscheduled stoppage towards the end of the month. Our environmental track record continued to improve in the third quarter and, for example, no odour complaints from nearby residents were received in September. "Whilst I am pleased to report these underlying supportive trends, we have continued to face water balance challenges and consequential effects on metals production. Historically heavy rainfall has continued in Sotkamo since the spring, and during the summer months rainfall exceeded the long-term average by 50-100%. Excess water in circulation has diluted metal grades in leach solution, and the high water content in heaps has also impacted leaching performance by reducing the efficiency of aeration."He added: "Our third quarter financial result was impacted by the LME nickel price declining to its lowest levels since mid-2009, recording an average of approximately USD 15,700/t in August. Although the price recovered somewhat towards the quarter-end, the market outlook for nickel remains quite cautious and uncertain in the coming months. In order to ensure Talvivaara's financial flexibility in this environment, we are focusing on attaining the targeted savings from the temporary alteration of our production scheme as well as assessing options for additional funding."NR