Talvivaara Mining to raise 260m euro through rights issue

Talvivaara Mining Company has unveiled a proposal to raise gross proceeds of 260m euro through a rights issue in an effirt to secure liquidity for the continued ramp-up of operations towards full capacity.

Talvivaara Mining Company has unveiled a proposal to raise gross proceeds of 260m euro through a rights issue in an effirt to secure liquidity for the continued ramp-up of operations towards full capacity.

Furthermore, the funds will be used to provide "an appropriate capital structure" that will enable the refinancing or repayment of short-term and medium-term indebtedness, including the convertible bonds due in May 2013.

The rights issue, which is expected to take place on March 8th, will be underwritten through a combination of irrevocable subscription commitments from Pekka Per, Solidium and Varma.

The company has established interim financing arrangements with Nyrstar and Cameco, amounting to 12m euros and $10m, respectively, and has amended its revolving credit facility for 100m euros.

Tapani Jrvinen, Chairman of Talvivaara, said: "While Talvivaara has encountered a number of significant challenges recently, reflected in the company's current liquidity position and the necessity of the proposed capital raise, the board is confident in Talvivaara's long-term potential, with its significant sulphide nickel resources and cost effective bioheapleaching process following ramp-up, and in the long-term fundamentals of the nickel industry.

"However, the production challenges suffered over the course of 2012 have underlined the need to focus on stabilising and improving Talvivaara's production processes in order to return to a sustainable ramp-up towards the targeted full capacity of 50,000 tonnes of nickel per year. Talvivaara is implementing a number of measures to resolve its near-term operational challenges, but the full effect of these actions will only materialise over time.

"Through the financing transactions announced today, we are putting in place a strong capital structure to allow Talvivaara to overcome its prevailing challenges and continue the successful ramp-up of its operations."

He continued: "Furthermore, the production shortfalls Talvivaara has experienced combined with a weak nickel price environment have resulted in a strained liquidity position, which the board expects to be further exacerbated in 2013 due to the production impact caused by the prevailing water balance issues.

"The board therefore believes that Talvivaara will need to strengthen its liquidity position to secure sufficient working capital and enable repayment or refinancing of short-term and medium-term indebtedness, including the convertible bonds due in May 2013."

The share price fell 2.52% to 87p by 08:49.

Shares in the group have fallen 74% over the past year, equal to around 250p.

NR

Recommended

Too embarrassed to ask: what is short selling?
Too embarrassed to ask

Too embarrassed to ask: what is short selling?

Short sellers are often accused of unfairly driving share prices down to make a quick buck. But short selling is a perfectly legitimate – if risky – t…
26 Jan 2021
Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Most Popular

The FTSE 100 is set for a makeover with an influx of new tech stocks
UK stockmarkets

The FTSE 100 is set for a makeover with an influx of new tech stocks

The FTSE 100 – the dullest index in the world – is about to reinvent itself as a host of new firms list on the market. The change is long overdue, say…
24 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021
Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021