Nov. 15 (Bloomberg) -- Talvivaara Mining Co., the Finnish nickel miner struggling to meet production targets and stem environmental contamination, brought back its founder as chief executive officer until operations are “stabilized.”
Talvivaara named Pekka Pera as CEO effective today and appointed Tapani Jaervinen as chairman of the board, according to a statement to the Helsinki Stock Exchange. Harri Natunen, who steps down as head of the company, continues in “other executive functions,” it said.
Talvivaara has had difficulty boosting cash flow after nickel prices fell to the lowest in three years and heavy rains damaged its metal heap, causing the Espoo-based company to reduce output targets. A waste-water leak, which the company struggled to contain for 11 days before stemming the flow yesterday, contaminated waters with nickel, zinc and uranium.
Talvivaara rose 12 percent to 1.393 euros in Helsinki trading as of 1:25 p.m. local time. The stock gained 6.7 percent in London.
Metal production has been halted since the breach in the gypsum pond was found. The metal discharges may harm wildlife in the surrounding lakes, while the radiation levels pose no harm to humans.
The company will hear back from the local authority later today about when production can be restarted, Pera told a briefing in Helsinki. He estimated that the cost of cleaning up the environmental damage could run to “several million euros.”
Natunen had been appointed CEO on April 26, replacing Pera, who announced his resignation a year ago after the company cut its annual output forecast twice.
The latest appointments “are of interim nature and in force until further notice and at least until the company’s operations have been stabilized following the recent events,” Talvivaara said in today’s statement.
The company, which has a 76.9 million-euro ($98 million) 5.25 percent bond maturing on May 20, may fail to raise new debt to repay it. Instead, it may seek funds by selling new shares and diluting existing shareholders, analysts at FIM Bank Oyj and Nordea Bank AB have said.
The new CEO said he’d be prepared to bolster Talvivaara’s finances himself. “I believe in Talvivaara’s potential and I’m ready to invest more in it, within my means of course.” Pera is the biggest shareholder with 21 percent.
Talvivaara said on Oct. 15 it was unlikely to meet a full-year output target of 17,000 metric tons of nickel because excess water at the Sotkamo mine had diluted metal grades in the leaching process. It has forecast that fourth-quarter production will be higher than the 4,030 tons in the third. That projection will be reviewed after a startup date for production is known.
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