Talvivaara Loss Widens, Government Seeks Investor Support

Talvivaara Mining Co. (TALV), the Finnish nickel miner struggling to avoid bankruptcy, reported a bigger loss than analysts estimated as prices of the metal declined.

The net loss widened to 29.9 million euros ($40.4 million) in the third quarter from 12.1 million euros a year earlier, Talvivaara said today in a statement. Analysts had expected a loss of 27.8 million euros, according to the average of five estimates compiled by Bloomberg.

Talvivaara has suffered from weakening nickel prices and a slow production ramp-up at its mine in northern Finland. Progress at the operation has been hampered by excess water, driving up costs and hindering the extraction of metals from ore. The Espoo-based company said last month it’s exploring options for new funds for the second time in a year.

Net cash fell to 46.5 million euros at the end of September from 101.1 million euros at the end of June. The Finnish government said today the company should seek financing from its investors.

“The state has actively taken part in negotiations aimed at securing funding that enables the company to continue operations,” Economy Minister Jan Vapaavuori said in a statement. “The precondition is a market-driven solution where private investors participate on an equal footing with the state.”

Shares Decline

Talvivaara slumped as much as 13 percent in London trading, and was down 7.6 percent at 6.83 pence as of 11:24 a.m. local time. The stock has tumbled 75 percent this year.

“Talvivaara continues to struggle and needs to raise further cash,” Investec Securities Ltd. said in a note to investors. “The company’s technical difficulties continue to be compounded by the weak nickel market that shows little sign of improving in the near future.”

Nickel for three-month delivery has dropped 18 percent this year on the London Metal Exchange, after sliding 8.8 percent in 2012. In April Talvivaara completed a 261 million-euro underwritten rights offer to stave off default and bankruptcy.

The company is in “advanced discussions with certain stakeholders” to raise funds, it said in today’s statement. “Although there can be no assurance that such additional financing will be obtained, the relevant parties are working toward a definitive agreement.”

Talvivaara withdrew a 2013 output forecast of 18,000 metric tons in July after producing 4,508 tons of nickel in the first half. It produced 2,595 tons of the metal and 5,645 tons of zinc in the third quarter.

Bond Refinancing

The company plans to refinance bonds maturing in 2015 and 2017 after output has ramped up, Chief Financial Officer Saila Miettinen-Laehde said last month. Talvivaara’s biggest owner, Finnish equity investment manager Solidium Oy, said Oct. 10 it was concerned that the financial situation was unsustainable and wouldn’t yet commit to participating in a share issue.

“Whilst we cannot influence metal prices, we are improving our operations and we expect to produce more metals in the second half of the year than we did in the first,” Talvivaara Chief Executive Officer Pekka Pera said in the statement. Pera holds 6.5 percent of the 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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