Talvivaara Has Record Drop on Nickel Output, CEO Resignation

Talvivaara Mining Co., the owner of a Finnish nickel mine, fell the most on record in London trading after cutting its output estimate, warning of a strike and announcing the departure of Chief Executive Officer Pekka Pera.

Talvivaara slid as much as 29 percent, the biggest decline since starting to trade in May 2007. The company cut its 2011 production forecast to 16,000 metric tons from an April estimate of 22,000 tons to 28,000 tons. Metal workers in Finland have said they may strike Oct. 21 to Nov. 7, it said in a statement.

The nickel producer has seen results hampered by a plant stoppage in April and May, and falling prices. Nickel for three- month delivery on the London Metal Exchange has tumbled 29 percent in six months as a slowdown in economic growth erodes demand for the metal used in stainless steel.

Talvivaara produced 3,153 tons of nickel in the third quarter and 11,319 tons in the first nine months of the year, the Espoo-based company said in today’s statement. Third-quarter zinc output was 7,286 tons, it said.

“There is no sugar-coating a dire third quarter,” Dominic O’Kane, a London-based mining analyst at Liberum Capital Ltd., said in a note to investors.

Talvivaara fell as much as 73.5 pence to 180.1 pence, and traded at 196.9 pence as of 2:45 p.m. in London. The stock has dropped 67 percent this year.

Generator Faults

“Production suffered from problems in hydrogen sulfide generators during the latter half of the period,” the company said in the statement. It uses a so-called bioheapleaching process to extract metal from ore or rock and dissolve it into solution.

Talvivaara also said today it’s seeking a replacement for CEO Pera who will retire in coming months, according to a separate statement. Pera won’t sell his 23 percent stake and will remain on the board.

“As a 23 percent stakeholder I would sack myself,” he said on a conference call. “In that sense, at least 23 percent of the shareholders are happy about this.”

Pera has been in charge of the company for eight years. Talvivaara has posted an annual net loss for the past two.

“Whilst the timing comes as a shock, we feel Pera’s reasoning is not surprising and is probably justified by another weak quarter,” O’Kane wrote. “He has overseen the design, financing and construction of Talvivaara’s key mine, but ramp-up has been beset by delivery disappointments.”

The Talvivaara mine in Sotkamo, eastern Finland, is one of the largest known nickel sulfide deposits in Europe, according to the company’s website. The nickel producer had forecast annual production of 30,000 tons to 35,000 tons before April, when it brought forward and extended planned maintenance.

“We’ll make sure that next time when we promise something we’d rather die than come back to market and tell them once again we failed,” Pera said.

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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