FTSE 250 base metals miner Talvivaara has acknowledged that the first quarter of 2012 was disappointing as it reported an operating loss for the three months to the end of March.
"The first quarter of 2012 was a difficult period for Talvivaara with disappointing production and financial performance," admitted outgoing Chief Executive Officer Pekka Pera who will be replaced by Harri Natunen as of tomorrow and become the Executive Chairman.
The group produced 3,374 tonnes of nickel in the period after output was affected by process environmental process modifications and unscheduled improvement measures in metals recovery. In the first and fourth quarters of 2011, production was 4,215t and 4,769t, respectively. Meanwhile, zinc production fell from 10,524t to 7,890t quarter-on-quarter but improved from the 6,363t produced a year ago.
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The group recorded an operating loss of €11.4m in the first quarter, compared with a profit of €14.9m in the preceding fourth quarter of 2011 and €11.6m in the year-ago period. Pre-tax loss totalled €19.36m, down from a profit of €3.32m last year.
Production was also affected by a fatal incident at the Sotkamo mine site in mid-March which led to a lowered solution flow into metals recovery and also started an unscheduled stoppage with focus on preventative occupational safety-related modifications and improvements.
Net sales totalled €30m, considerably down from the €66.5m reported the year before mainly due to lower-than-expected metals production.
"Despite the disappointing first quarter performance, I am quite pleased with the underlying positive developments in our operations. In particular, recent analysis of ore samples taken from heap section 3 indicates nickel recoveries of up to 85% in less than two years of leaching, which exceeds our expectations," Pera said.
As previously announced, full-year production production guidance has been maintained at 25,000-30,000t of nickel, but production is expected to be at the lower-end of the range.
"Near-term production volumes will depend on realised capacity utilisation rates of the metals recovery plant following the late March - early April stoppage and development of metal grades in pregnant leach solution," the company said.
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