Talvivaara Slumps as Liquidity Worse Than Expected: London Mover

Talvivaara Mining Co. (TALV), a Finnish nickel miner, sank to a record low in London trading after saying it’s assessing all options for additional funding to offset low prices and output.

The shares sank as much as 20 percent to 6.81 pence, the biggest intraday drop since April 8 and the lowest since they began trading in 2007. They were at 7.05 pence as of 10.14 a.m. The company is seeking funds after liquidity deteriorated more than expected, it said in a statement today.

Talvivaara withdrew a 2013 output estimate of 18,000 metric tons in July after producing 4,508 tons of nickel in the first half because of a slow restart to metal extraction caused by flooding and waste-water problems at its operations. In April, it completed a 261 million-euro ($340 million) underwritten rights offer to stave off default and bankruptcy.

“Looks like another financing call on the cards,” Numis Securities Ltd. said in a note. “One we continue to avoid.”

The company produced 2,595 tons of nickel and 5,645 tons of zinc in the third quarter, it said in the statement. It expects the second half output of nickel will rise “substantially” from the first half.

“Another set of weak production results,” Ben Davis, an analyst at Liberum Capital Ltd., said in a note. “Unclear what the financing will be. The last rights issue was heavily dilutive for major shareholder and CEO.”

No Improvement

Talvivaara’s biggest owner, Finnish equity investment manager Solidium Oy, said it was concerned about the situation and would wait and see about participating in a share issue. “Talvivaara only has a single mine, which makes it more vulnerable than international mining giants,” Investment Director Hanna Masala said by phone.

The shares have declined 75 percent this year.

Talvivaara’s liquidity position has weakened as a result of lower metal prices and output, it said in the statement. “The company is undertaking an assessment of all available funding options to secure its financial flexibility and a sufficient level of liquidity.”

Average nickel prices for three-month delivery at the London Metal Exchange declined 20 percent this year to $13,682 a ton.

“In the short term, we can unfortunately not expect to see material improvements in commodity prices and will therefore have to keep concentrating on our efficiency and productivity program to conserve cash and improve productivity,” Chief Executive Officer Pekka Pera said in the statement.

Pera holds 6.5 percent of the company’s shares while Solidium holds 16.7 percent, according to data compiled by Bloomberg.

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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