TALV.L Share News (TALV)

Talvivaara Mining Company has unveiled a proposal to raise gross proceeds of 260m euro through a rights issue in an effort to secure liquidity for the continued ramp-up of operations towards full capacity.Furthermore, the funds will be used to provide "an appropriate capital structure" that will enable the refinancing or repayment of short-term and medium-term indebtedness, including the convertible bonds due in May 2013. The rights issue, which is expected to take place on March 8th, will be underwritten through a combination of irrevocable subscription commitments from Pekka Perä, Solidium and Varma.The company has established interim financing arrangements with Nyrstar and Cameco, amounting to 12m euros and $10m, respectively, and has amended its revolving credit facility for 100m euros. Tapani Järvinen, Chairman of Talvivaara, said: "While Talvivaara has encountered a number of significant challenges recently, reflected in the company's current liquidity position and the necessity of the proposed capital raise, the board is confident in Talvivaara's long-term potential, with its significant sulphide nickel resources and cost effective bioheapleaching process following ramp-up, and in the long-term fundamentals of the nickel industry. "However, the production challenges suffered over the course of 2012 have underlined the need to focus on stabilising and improving Talvivaara's production processes in order to return to a sustainable ramp-up towards the targeted full capacity of 50,000 tonnes of nickel per year. Talvivaara is implementing a number of measures to resolve its near-term operational challenges, but the full effect of these actions will only materialise over time. "Through the financing transactions announced today, we are putting in place a strong capital structure to allow Talvivaara to overcome its prevailing challenges and continue the successful ramp-up of its operations."He continued: "Furthermore, the production shortfalls Talvivaara has experienced combined with a weak nickel price environment have resulted in a strained liquidity position, which the board expects to be further exacerbated in 2013 due to the production impact caused by the prevailing water balance issues. "The board therefore believes that Talvivaara will need to strengthen its liquidity position to secure sufficient working capital and enable repayment or refinancing of short-term and medium-term indebtedness, including the convertible bonds due in May 2013." The share price fell 2.52% to 87p by 08:49.Shares in the group have fallen 74% over the past year, equal to around 250p.NR