TALV.L Regulatory News (TALV)

26 Feb 2008 07:01

Talvivaara Mining Company Ltd26 February 2008 STOCK EXCHANGE RELEASE 26 February 2008 Talvivaara Mining Company annual accounts review for year ended 31 December 2007 Mine construction proceeding according to plan Highlights of 2007 • Bankable Feasibility Study for the Talvivaara mine was completed on 23 March • Environmental permit and starting order were obtained on 29 March • Project finance facility of USD 320 million was signed on 7 May • Initial Public Offering (IPO) on the London Stock Exchange Main Market with gross proceeds of EUR 302 million was successfully closed on 1 June, ensuring that together with the committed project finance facility the project was fully financed • Talvivaara joined the FTSE 250 index with effect from 24 September • A 26% increase in measured and indicated mineral resource at the Kuusilampi and Kolmisoppi deposits to 336 million tonnes was announced on 4 December • Construction work at the Talvivaara mine is proceeding according to timetable and on schedule for production to begin in Q4 2008 • No material capital or operational cost overruns Talvivaara's key figures 2007 2006 Operating profit (loss) EUR '000 2,332 -34,609Capital expenditure EUR '000 134,139 6,686Research & development EUR '000 734 1,361expenditureEarnings per share EUR -0.06 -0.41Cash and cash equivalents at EUR '000 153,466 29,361the end of the year(2)Equity-to-assets ratio 90% -2.0%Equity per share EUR 1.76 -0.01Market capitalization EUR '000 911,829 - at the end of the year(3) Number of employees at 64 25the end of the year All reported figures in this release are unaudited 1 Includes Available-for-sale financial assets and for 2006 financial assets at fair value through profit or loss. 2 Market capitalization is calculated on the EUR/GBP exchange rate 0.73335 published by the European Central Bank on 31 December 2007. CEO Pekka Pera: "2007 was a remarkable year for Talvivaara. We achieved all of the key goals weset for the period, including successful financing of the project through theIPO and committed project finance, timely commencement of construction after theenvironmental permit was granted at the end of March, and progress inconstruction according to plan and on budget throughout the rest of the year. Ina project the size of Talvivaara, we knew we would be faced with unexpectedchallenges, but the experience and skills of the team enabled the Company totake corrective measures when needed and stay on course. All our peopleover-achieved on numerous occasions during the year. Their individual and jointefforts are what make me especially proud. Following our IPO the Talvivaara share price stood up despite the turmoil in themarkets and the volatility in commodity prices. I trust that our investorsappreciated our hard work and delivery on promises. In 2008 we will continue to work hard, together with our dedicated contractorsand suppliers, to achieve our primary goal of bringing the mine into productionbefore the year end. With our first production now in sight I am looking forwardto getting on with the business of mining nickel, where I see continuing strongglobal demand." Enquiries: Talvivaara Mining Company Ltd.Pekka Pera, CEO Tel. +358 20 712 9800Saila Miettinen-Lahde, CFO Merlin Tel. +44 207 653 6620David SimonsonTom RandellAnca Spiridon JPMorgan Cazenove Tel. +44 207 588 2828Steve BaldwinShona Graham Competence CommunicationsAnna-Mari Tiilikainen Tel. +358 9 6689 6925 Talvivaara Mining Company will hold a conference call for investors and analystsfollowing the release of its Annual Results at 2:00pm GMT 4:00pm Finnish time.Conference call details are as follows: UK Dial-in: 0870 043 6305International dial-in: +44 (0) 1452 556 620Conference call ID: 37018028 A pivotal year in Talvivaara Mining Company's development In 2007, Talvivaara evolved from a privately held project Company finalising itsBankable Feasibility Study for the Talvivaara nickel mine to a FTSE 250 Companywell on its way to starting production, as planned, during the last quarter of2008. Along the way, the Company achieved several major milestones, includingthe environmental permit for the mine in March 2007, and the securing offinancing for the construction of the mine through a committed project financefacility of USD 320 million and a successful IPO raising EUR 302 million in June2007. The latter half of the year saw remarkable progress with the construction of themine and the metals processing facilities, leading to the project reaching yearend having been on time and on budget throughout the period. Finally, thegeological work done at the Kuusilampi deposit resulted in a significantincrease in mineral resources being reported in December 2007. The financial development of the Company largely reflected the above namedfinancing transactions and project related spending. At EUR 134 million, capitalexpenditure for the period was in line with the development plan and financedentirely from equity. The initial drawdown of the project term loan isanticipated during the spring of 2008. With production anticipated to commencein late 2008, the Company had no revenues in 2007. Volatile market environment In the base metal markets, 2007 will be remembered for extreme volatility innickel prices, with the London Metals Exchange (LME) nickel cash quotationsranging from the historical high of more than USD 54,000/tonne in the springdown to around USD 25,000/tonne in August. After the substantial fall in pricesduring the summer months, nickel prices were more stable during the rest of theyear, closing at around USD 26,000/tonne at the end of December. The other metals of relevance to Talvivaara - zinc, cobalt and copper - alsoexperienced substantial volatility through the year, with zinc, which is themost significant of Talvivaara's by-products, on a mostly downward trend after aprice peak above USD 4,000/tonne in the spring. At year end, the zinc price wasaround USD 2,400/tonne. Copper started the year at USD 6,200/tonne and closed atslightly above USD 6,600/tonne, exhibiting the least price volatility of thesemetals during the period. Cobalt prices, on the other hand, rose from USD 23/lbin January to USD 39/lb at the end of December, with a very strong upward trendseen especially during the last four months of the year. The future outlook for nickel and zinc remains solid, and the present pricelevels of nickel and zinc of around USD 29,000/tonne and USD 2,400/tonne,respectively, are some two and a half times as high as the assumptions used inTalvivaara's financial planning. Financial review Owing to its status as a project Company with production anticipated to start inlate 2008, Talvivaara had no revenues during the year ended 31 December 2007(2006: EUR 0). Overall, the financial development of the Company reflected thefundraising of EUR 285 million (net) through the IPO, capital expenditure of EUR134 million in line with the development plan, and operating costs that,compared to 2006, grew in line with the growth of the Company. The Company's other operating income, amounting in total to EUR 13.6 million(2006: EUR 0.2 million), consisted mainly of unrealised gains in biologicalassets (living trees) and fair value gains in nickel forward sales contracts.The operating profit amounted to EUR 2.3 million (2006: EUR (34.6) million), andloss for the period to EUR (9.9) million (2006: EUR (36.1) million), reflectingto a large extent finance costs related to the EUR 33 million convertible loanissued in 2006. In comparison to 2006, it should be noted that the loss of EUR(36.1) million recognised in the previous period resulted primarily from therevaluation of Outokumpu Mining Oy's option for a 20% shareholding in TalvivaaraProject Ltd. rather than costs related to the Company's operations. OutokumpuMining Oy exercised this option on 14 May 2007. On the balance sheet as at 31 December 2007, the Company's current assetsamounted to EUR 165.6 million (2006: EUR 30.0 million), with the year end figurereflecting largely the IPO proceeds less subsequent capital expenditure on themine project. The Company's total equity was EUR 315.0 million (2006: EUR (0.8)million) and total assets EUR 350.0 million (2006: EUR 39.7 million). Talvivaara's total borrowings amounted to EUR 1.4 million (2006: EUR 38.0million). The change from the previous period resulted from the conversion ofthe EUR 5.3 million convertible capital loan issued in 2005, and the conversionand partial redemption of the EUR 33 million convertible loan of 2006 inconnection with the IPO. The committed project term loan of USD 320 million hasnot yet been drawn down. Significant progress with the mine project Talvivaara completed the Bankable Feasibility Study for the Talvivaara mine inMarch 2007. The technical solutions described in the study were largely based onsuccessful pilot trials of bioheapleaching and metals recovery, which,respectively, demonstrated high yields from the ore and from the leachsolutions. In all, the results of the study confirmed both the technical andeconomic feasibility of the project using relatively conservative assumptionsfor key parameters such as metal recoveries and metal prices. Construction of the mine started in April 2007, as soon as the environmentalpermit had been obtained. At the time, most of the area was uninhabited forestedland. By July 2007, access roads to the industrial site had been constructed,substantial areas for the bioheapleaching pads had been cleared and levelled,and the plant site was taking shape with foundations for buildings underconstruction. By October, critical earthworks which could not be carried out during the wintermonths, such as the construction of heap foundations, had progressed as planned.All major equipment had been ordered and the removal of the overburden hadstarted slightly ahead of schedule. The major goals for 2008 are the start of mining in April, the start ofbioheapleaching in July, and first metal sulphides production in October. Thekey pre-requisites for meeting these goals are the timely delivery of criticalequipment and their successful installation particularly during the months ofJune and July. Due to the tight timetable, the mechanical, electrical and automationinstallation and assembly of most major equipment will be carried out inparallel during the summer months, contributing to a challenging projectmanagement and staffing environment. At the time of this release, the Companyhad not been notified of any material delays in equipment deliveries, and allkey supply processes are continuing to be monitored regularly by Talvivaarapersonnel. Equipment ordered from leading suppliers Most of the equipment orders were placed during the first half of 2007 withdeliveries scheduled typically 12 to 18 months later. All significant supplycontracts for major equipment were awarded to internationally known companiessuch as Sandvik (crushing circuit), Outotec (reactors), Mahler (oxygen andhydrogen plants); FAM (stacking and reclaiming systems), Metso Minerals(agglomeration drums), Larox (filters), Hitachi (dump trucks and excavators),Siemens (electrical systems) and Metso Automation (automation). Land acquisitions Talvivaara has acquired land in the mining area since late 2006 in order tosecure full legal title to the areas it required to commence its activitiesunder the starting order granted together with the environmental permit in March2007. Most of the acquisitions were made during the first half of 2007, and intotal Talvivaara has acquired approximately 53 square kilometres of landrepresenting some 90% of the expanded mining concession area. Infrastructure Through a parliamentary resolution in June 2007, the State of Finland made adecision to support Talvivaara's infrastructure development by a total of EUR53.2 million in subsidies, consisting of EUR 40.0 million (0% VAT) for arailroad connection, EUR 7.2 million for road improvements, and EUR 5.0 millionfor other mine related infrastructure expenditure. Funds for these expenditureswere reserved in the State budget for 2008-2011. Design of the 26 km rail connection from Murtomaki, located west of the minearea, to Talvivaara started in 2007 and the contract for its construction hasbeen awarded to VR-Track Ltd. The railroad is expected to be operational inAugust 2009. In accordance with the Finnish State budget decision, Talvivaara shall, throughits wholly owned subsidiary Talvivaara Infrastructure Ltd., initially fund theconstruction of the connection. Provided the rail connection is used as theprimary transportation route of the mine, the Finnish State will subsequentlyreimburse the costs over the two-year period of 2010-2011. Upon full payment bythe Finnish State the title to the railroad will transfer to the Finnish RailAdministration. Plans and designs for road works on the regional road number 870 bypassing themine area on its eastern side and the local road number 8714 crossing the minearea in the east-to-west direction were made by Destia Oy. The improvement worksand partial re-direction of the roads are being carried out during 2008 and 2009in cooperation with the Finnish Road Administration. A 43 km power line connection was constructed from the Vuolijoki substation,located west of Talvivaara, to the mine area, connecting the mine directly tothe national grid. The power line was commissioned in January 2008. Process water will be initially obtained through a purpose-built pipeline fromLake Kolmisoppi in the northern part of the mining concession area. Constructionof the pipeline started in 2007 and it is anticipated to be operational by earlysummer 2008. Significant increase in mineral resource In December 2007, Talvivaara announced a 26% (76 million tonnes) increase inMeasured and Indicated Mineral Resources and a 23% increase (77 million tonnes)in Measured, Indicated and Inferred Resources in the Kuusilampi and Kolmisoppideposits. The 26% addition took the Measured and Indicated Resources to a totalof 336 million tonnes and the total Mineral Resource up to 414 million tonnes.The increased resources contain 1.1 million tonnes (earlier 0.88 million tonnes)of nickel metal and 2.2 million tonnes of zinc metal (earlier 1.6 milliontonnes), reaffirming Talvivaara's prospective position as one of the top nickelmines globally and an internationally significant zinc producer. The resource increase was located within the existing known resource body andexcludes any additional resources Talvivaara may identify in adjacent areas. Itresulted from a drilling campaign focused on ore boundary definition at theKuusilampi orebody in anticipation of the planned production start-up in 2008. Following the conclusions of this drilling campaign, Talvivaara commenced astudy to determine the feasibility of an increase in production capacity fromthe currently planned levels. The study is anticipated to continue through 2008and focus on economic, technical and environmental permitting aspects. Research and development Talvivaara continued active development of the bioheapleaching technology at apilot scale as well as in numerous smaller scale studies. The on-site pilotheap, which has been running since the fall of 2005, continued to perform wellin 2007, demonstrating good performance also in the secondary leaching phase inwhich most of the saleable copper and cobalt is recovered. Recoveries of nickeland zinc reached levels well above 90%, which presents substantial upsidecompared to the Company's financial forecasts, which have been based on theassumption of 85% final recovery. In addition to the pilot study, particular focal points for research during theperiod included chemical and biological iron removal from the leach solution;recovery of additional metals, particularly manganese, from the leach solutionand utilisation of gypsum residue. Active research and development cooperation continued with Tampere, Helsinki andLappeenranta Universities of Technology, University of Oulu and the GeologicalSurvey of Finland. The microbiology of the Talvivaara mine site and thedemonstration plant throughout the whole leaching period has also beenthoroughly investigated as part of the European Union funded Bioshale project atthe University of Wales and at Warwick University. Research funding has beenobtained from the Finnish Funding Agency for Technology and Innovation (Tekes). Permit issues An environmental permit for the operation of the Talvivaara mine, together witha starting order, were granted by the Northern Finland Environmental PermitAuthority on 29 March 2007. Individual appeals against the permit and thestarting order were submitted to the Vaasa Court of Appeal by ten persons. TheCourt of Appeal issued its ruling on the basis of the appeals on 15 February2008, whereby it maintained the original permit and the starting order in force,and rejected all demands for the revocation of the permit and the startingorder. The Court of Appeal made a few amendments and specifications to the termsof the permit, all of which in the opinion of the management are immaterial interms of changes to the projected costs for or the conduct of, the mining andmetals recovery operations at the site. The ruling may be appealed to theSupreme Administrative Court by 17 March 2008. The ruling of the SupremeAdministrative Court will be final and non-appealable. On 24 March 2005, Talvivaara submitted an application to the Ministry ofEmployment and Economy regarding an extension of the area covered by theexisting mining license. The extension was applied for in order to secure accessto the surrounding land and water areas as well as the right to construct therequired industrial infrastructure in the project area. On 3 October 2006, theMinistry approved the application and issued a land surveying order to the localsurveying office regarding the extension of the concession area in accordancewith the application of Talvivaara. Two appeals were filed with the SupremeAdministrative Court regarding the decision of the Ministry on the extension.The Supreme Administrative Court issued its final and non-appealable ruling onthe matter on 15 October 2007 and rejected both appeals in their entirety. Theland surveying and redemption session for the mining concession proceedings wasconcluded on 11 December 2007, awarding in aggregate EUR 924,358.07 incompensation to the remaining land owners within the mining concession area andowners of land adjacent to the mining concession area. By 11 February 2008, bothTalvivaara and a number of land owners had filed an appeal against the awardedcompensations with the Land Court of Rovaniemi. By 28 January 2008, only oneappeal was filed with the Ministry of Employment and Economy against the landsurveying and redemption process. The management does not expect either of thepending court cases to have any material bearing on the projected cost level,the conduct of the mining and metals recovery operations or further developmentof the project. Environment, health and safety In 2007 Talvivaara continued to observe its environmental management policybased on responsibility, transparency, and continuous improvement andassessment. Despite the ongoing construction activities, the impact ofTalvivaara's operations on the surrounding environment was minor. The mainenvironmental tasks of the year included reporting on the natural environment,monitoring of the environment in accordance with the terms of the environmentalpermit, and planning and construction of environmental protection structures forthe mining activities. Safety is of key importance to Talvivaara and its contractors on the miningsite. Safety practices at the site are based on the instructions and guidelinesapproved by the management and are in accordance with the Finnish industrialsafety legislation. In 2007, contractors' safety practices were controlled byweekly safety rounds, and the local industrial safety authorities paid regularvisits to the construction site. Safety training is provided for personnelworking for sub-contractors as well as for Talvivaara's own employees. The safety measures were effective, with only six relatively minor lost timeaccidents during the period. Considering that several hundred employees fromnumerous different contractors were working on a site of some 60 squarekilometres, this record can be considered remarkably good. Risk management In line with current corporate governance guidelines on risk management,Talvivaara carries out an ongoing process endorsed by the Board of Directors toidentify risks, measure their impact against certain assumptions and implementthe necessary proactive steps to manage these risks. Talvivaara's operations are affected by various risks common to the miningindustry, such as risks relating to the development of Talvivaara's mineraldeposits, estimates of reserves and resources, infrastructure risks, andvolatility of commodity prices. There are also risks related to currencyexchange ratios, management and control systems, intellectual property rights,historical losses and uncertainties about the future profitability of theTalvivaara Group, dependence on key personnel, effect of laws, governmentalregulations and related costs, environmental hazards and risks related toTalvivaara's mining concessions. Personnel Talvivaara was successful in its recruiting during the year, nearly tripling itsnumber of personnel from 25 to 64 by the end of 2007. Most of the personnelrecruited during the period were management and administrative employees,leaving the challenge of recruiting around 200 workers for the initialproduction phase to 2008. Preparations for worker recruitment started in 2007 through three tailoredtraining programmes designed and operated in cooperation with the Kainuuprovince labour administration. These courses are attended by a total of 65students who are trained as production drillers, crusher operators and processworkers. All students who successfully complete the training in 2008 will beemployed by Talvivaara. Further training programmes are planned for 2008. The core principles of Talvivaara's human resources policy are diversity of ageand a broad variation of work experience among personnel. Shares and shareholders In connection with the Company's IPO on the London Stock Exchange, a total of84,252,638 shares were issued. This number included 10,921,939 shares subscribedby Outokumpu at a discount of 20% to the offer price of 250 pence, and 5,457,219shares issued to Varma Mutual Pension Insurance Company and the Finnish IndustryInvestment upon setting off their bridge loans of 2007 to the Company of EUR 15million and EUR 5 million, respectively. In addition, a total of 48,811,050conversion shares were issued to the holders of the EUR 33 million convertiblebond issued in 2006, and the holders of the EUR 5.3 million convertible capitalloan issued in 2005. The average number of shares issued and outstanding in 2007was 168,213,011, and the number of shares at year end was 222,896,718. As at 31 December 2007, the shareholders who held more than 5% of the shares andvotes of Talvivaara were Pekka Pera (27.1%), Varma Mutual Pension InsuranceCompany (8.6%), Norilsk Nickel Holdings Ltd. (5.5%) and Eton Park CapitalManagement LP (5.0%). The IPO issue price on 30 May 2007 was GBP 2.50, after which the average tradingprice through to 31 December was GBP 2.65 (EUR 3.84). The lowest and highesttrading prices during the period were GBP 2.05 (EUR 2.96) and GBP 3.13 (EUR4.53), respectively(1). The trading price at year end was GBP 3.00 (EUR 4.09)(2). The trading volume from the listing until the year end was 26,783,000 shares, which in relation to the weighted average number of shares during the year represented 15.9%. Share options By resolution passed at the general meeting of the shareholders on 28th February2007, the Company resolved to issue 99,990 stock options gratuitously to the keypersonnel of the Company and its subsidiaries entitling, after the split of theCompany's shares 1:70, to subscribe for a maximum of 6,999,300 new shares in theCompany (2007 Option Scheme). Pursuant to the terms and conditions of the 2007Option Scheme, the Board of Directors shall decide upon the distribution of thestock options. During 2007, the Board of Directors, based on the recommendation of theRemuneration Committee, allocated 32,643 2007A Options, giving an entitlement tosubscribe to a total of 2,285,000 new shares in the Company, to the personnel ofTalvivaara and its subsidiaries (excluding options granted to the Directors andmembers of the Executive Committee). The voting rights of the shares to beissued against the outstanding share options amount to 1.0% of the total sharecapital. Events after the review period A 43 km power line connection from the Vuolijoki substation, located west ofTalvivaara, to the mine area, was commissioned on 18 January 2008. On 15 February 2008, the Appellate Court of Vaasa issued their ruling on theenvironmental permit and the starting order for the Talvivaara mine. Under theruling, all the demands for revoking the permit and the starting order wererejected, the compensations awarded and redemption decisions made by thepermitting agency were left unchanged. Certain specifications were made to fourpermit terms, but these amendments are not expected to have materialimplications to the cost basis of the mine. Following the ruling, there is a 30day appeal period for potential appeals to the Supreme Administrative Court. Short-term outlook The short-term outlook for the Company is positive, with the constructionproject at the Talvivaara mine progressing according to plan, and the mineanticipated to commence production during the last quarter of 2008. The marketoutlook for the Company's main products, nickel and zinc, remain solid withpresent and forward prices and demand forecasts all at healthy levels. As theCompany's cost base is primarily in euros and the committed project financefacility is US dollar denominated, the recent weakness of the US dollar hascaused the Company to secure a minimum level of euros obtainable in connectionwith the draw down of the loan through currency options. With this protectivemeasure having been taken, the Company feels confident that the fundingavailable is sufficient to complete the construction of the Talvivaara mine. Board of Directors proposal for profit distribution The Board of Directors is proposing to the Annual General Meeting to be held on14 March 2008 that no dividend be declared in respect for the year 2007. Annual General Meeting 2008 The Annual General Meeting of Talvivaara Mining Company will be held on Friday,14 March 2008 starting at 10:00 a.m. in Sotkamo, at Lahnasjarventie 73, 88120Tuhkakyla, Finland. -------------------------- (1) Trading price in euro has been calculated on the average of EUR/GBP exchange rates published by the European Central Bank between 30 May and 31 December 2007. (2) Trading price in euro is calculated on the EUR/GBP exchange rate 0.73335 published by the European Central Bank on 31 December 2007. CONSOLIDATED BALANCE SHEET all amounts in EUR) 2007 2006 ASSETS Non-current assets Property, plant and equipment 129,718,177 3,959,629 Biological assets 9,048,538 963,576 Intangible assets 6,202,032 4,771,793 Derivative financial instruments 9,830,966 - Other receivables 29,651,794 42,030 184,451,507 9,737,028 Current assets Other receivables 11,352,710 651,854 Available-for-sale financial assets 26,965,327 22,537,285 Derivative financial instruments 779,323 - Financial assets at fair value - 5,039,726 through profit or lossCash and cash equivalent 126,500,712 1,784,055 165,598,072 30,012,920 Total assets 350,049,579 39,749,948 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Share capital 15,624 12,715 Share premium 8,085,842 2,755,433 Other reserves 321,777,699 1,336,065 Retained earnings (33,422,978) (4,991,395) 296,456,187 (887,182)Minority interest in equity 18,590,725 87,538 Total equity 315,046,912 (799,644) Non-current liabilities Borrowings 1,405,000 1,148,600 Other payables - 41,302 Deferred tax liabilities 5,326,885 193,247 Provisions 32,401 31,187 6,764,286 1,414,336 Current liabilities Borrowings 24,600 36,879,112 Trade payables 25,982,941 1,037,033 Other payables 2,230,840 1,219,111 28,238,381 39,135,256 Total liabilities 35,002,667 40,549,592 Total equity and liabilities 350,049,579 39,749,948 CONSOLIDATED INCOME STATEMENT (all amounts in EUR) 2007 2006 Other operating income 13,563,766 218,016 Materials and services (2,212,618) (855,991)Employee benefit expenses (3,986,882) (1,393,822)Depreciation, amortization, (761,404) (13,003)depletion and impairment chargesOther operating expenses (4,270,940) (32,564,009) Operating profit (loss) 2,331,922 (34,608,809) Finance income 4,265,806 1,883 Finance cost (11,506,191) (1,514,190)Finance cost (net) (7,240,385) (1,512,307) Loss before income tax (4,908,463) (36,121,116) Income tax expense (5,019,933) (14,800) Loss for the year (9,928,396) (36,135,916) Attributable to: Equity holders of the Company (9,383,804) (36,123,454)Minority interest (544,592) (12,462) (9,928,396) (36,135,916) Earnings per share for loss attributable to the equity holders of the Company (expressed in • per share) Basic and diluted (0.06) (0.41) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to equity holders of the parent (all amounts Share Share Invested Other Retained Total in EUR) capital premium non-restricted reserves earnings equity Minority Total interest equity Balance at 12,715 2,755,433 - 57,686 (672,941) 2,152,893 - 2,152,893 Fair value gains net of tax on available-for-sale financialassets - - - 126,442 - 126,442 - 126,442 Net income/(expense) recognized directly in equity - - - 126,442 - 126,442 - 126,442 Loss for the year - - - - (36,123,454) (36,123,454) (12,462) (36,135,916) Total recognised income and expense for 2006 - - - 126,442 (36,123,454) (35,997,012) (12,462) (36,009,474) Issue of share capital (Authorized) - - 825,020 - - 825,020 - 825,020 Options issued to acquire assets - - - - 31,805,000 31,805,000 - 31,805,000 Convertible capital loan - - - 326,917 - 326,917 - 326,917 Minority interest arising from business combinations - - - - - - 100,000 100,000100,000 Balance at 31 December 2006 12,715 2,755,433 825,020 511,045 (4,991,395) (887,182) 87,538 (799,644) Balance at 1 January 2007 12,715 2,755,433 825,020 511,045 (4,991,395) (887,182) 87,538 (799,644) Fair value gains net of tax on available-for-sale financial assets - - - 323,619 - 323,619 - 323,619 External costs, net of tax, directly attributable to the issue of new shares - - (16,901,873) - - (16,901,873) - (16,901,873) Net income/(expense) recognized directly in equity - - (16,901,873) 323,619 - (16,578,254) - (16,578,254) Loss for the year - - - - (9,383,804) (9,383,804) (544,592) (9,928,396)Total recognised income and expense for 2007 - - (16,901,873) 323,619 (9,383,804) (25,962,058) (544,592) (26,506,650) Transactions related with the sale of Talvivaara Project shares - - - - (19,047,779) (19,047,779) (953,820) (20,001,599) Issue of new shares - - 302,056,012 - - 302,056,012 - - Employee share option scheme - value of employee services - - - 271,383 - 271,383 - 271,383 Convertible capital loan - conversion into shares 2,909 5,330,409 - - - 5,333,318 - 5,333,318 Convertible bond - conversion into shares - - 34,692,493 - - 34,692,493 - 34,692,493 Minority interest arising from subsidiary - - - - - - 20,001,599 20,001,599 Balance at 31 December 2007 15,624 8,085,842 320,671,652 1,106,047 (33,422,978) 296,456,187 18,590,725 315,046,912 CONSOLIDATED CASH FLOW STATEMENT (all amounts in EUR) 2007 2006 Cash flows from operating activities Loss for the year (9,928,396) (36,135,916)Adjustments for Tax 5,019,933 14,800 Depreciation and amortization 761,404 13,003 Other non-cash income and expenses 12,031,672 31,805,000 Interest income (4,265,806) (1,883) Fair value gains on financial assets at fair value through profit or loss (9,830,966) (39,726) Interest expense 11,506,191 1,514,190 5,294,032 (2,830,532)Change in working capital Decrease(+)/increase(-) in other receivables (32,049,753) (396,158)Decrease(-)/increase(+) in trade and other payables 25,667,182 948,281 Change in working capital (6,382,571) 552,124 (1,088,539) (2,278,408) Interest and other finance cost paid (30,696,605) (9,704)Interest income 4,162,026 1,883 Income taxes paid - - Net cash used in operating activities (27,623,118) (2,286,229) Cash flows from investing activities Purchases of property, plant and equipment (126,547,258) (3,931,647)Purchases of biological assets (5,688,860) (963,576)Purchases of intangible assets (1,903,190) (1,791,187)Proceeds from sale of biological assets 527,712 - Proceeds from government grant related to intangible assets 458,824 - Purchases of available for sale financial assets (24,000,000) (36,468,000)Proceeds from sale of available for sale financial assets 20,009,281 14,953,126 Purchases of derivative financial instruments (951,873) - Purchases of other financial assets at fair value through profit or loss (104,000,000) (5,000,000)Proceeds from sale of other financial assets at fair value trough profit or loss 109,000,000 - Net cash used in investing activities (133,095,364) (33,201,284) Cash flows from financing activities Proceeds from share issue net of transaction costs 285,154,139 825,020 Proceeds from interest-bearing liabilities 20,281,000 36,283,714 Payment of interest-bearing liabilities (20,000,000) - Capital investment by minority shareholders - 100,000 Net cash generated in financing activities 285,435,139 37,208,734 Net (decrease)/increase in cash and bank overdrafts 124,716,657 1,721,221 Cash and bank overdrafts at beginning of the year 1,784,055 62,834 Cash and bank overdrafts at end of the year 126,500,712 1,784,055 This information is provided by RNS The company news service from the London Stock Exchange