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Annual Results 24 February 2010. DISCLAIMER The following information contains, or may be deemed to contain, “forward-looking statements” (as defined.

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Presentation on theme: "Annual Results 24 February 2010. DISCLAIMER The following information contains, or may be deemed to contain, “forward-looking statements” (as defined."— Presentation transcript:

1 Annual Results 24 February 2010

2 DISCLAIMER The following information contains, or may be deemed to contain, “forward-looking statements” (as defined in the U.S. Private Securities Litigation Reform Act of 1995). These statements relate to future events that involve known and unknown risks and other uncertainties. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. All forward-looking statements made in this presentation based on information presently available and Talvivaara Mining Company Plc. assumes no obligation to update any forward-looking statements. Nothing in this presentation constitutes investment advice and this presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities or otherwise to engage in any investment activity. 1

3 2009 highlights First nickel sulphide delivery to Norilsk Nickel Harjavalta Oy - February Secondary listing of Talvivaara shares on the Helsinki Stock Exchange - May Successful equity placing of approx 22.3m shares with €82.7m gross proceeds - July Decision to expand production capacity to 50,000 tpa nickel and 95,000 tpa zinc from 2012, funded by the equity placing - July Commissioning of redesigned, upgraded crushing circuit with 22m tpa crushing capacity - September Commissioning of Talvivaara-Murtomäki railhead - September 2

4 Highlights after the reporting period Completion of zinc streaming agreement with Nyrstar NV; $335m purchase payment received Early repayment in full of $320m Project Term Loan Facility Closing of all nickel, zinc and foreign exchange risk hedging positions with €45m net proceeds Plans to recover uranium as a by-product of leaching process; 350 tpa estimated production Bioheapleaching performing 20% over budgeted levels 3

5 Key figures Q4 2009Q4 200820092008 TurnoverEUR '0004,907 -7,571 - Operating profit (loss)EUR '000(31,568)5,280(54,776)(4,296) Profit (loss) before taxesEUR '000(45,082)5,419(75,085)(8,033) Net profit (loss) for the periodEUR '000(33, 011)21,179(54,958)5,832 Earnings per shareEUR(0.11)0.08(0.19)0.03 Return on equity-13.7%1.5%-13.6%1.6% Equity-to-assets ratio43.5%48.5%43.5%48.5% Net interest-bearing debt EUR '000 426,234285,467426,234285,467 Debt- to- equity ratio111.4%67.3%111.4%67.3% Capital expenditure 1 EUR '00036,462156,056118,514429,086 Cash and cash equivalents at the end of the periodEUR '00011,87782,71311,87782,713 Number of employees at the end of the period 308239308239 [1] Includes EUR 11 million expenditure on the Talvivaara-Murtomäki railhead to be reimbursed by the State of Finland 4

6 Talvivaara in a strong position going into 2010 Cash position and net debt At year end EUR 12 million At the date of reporting EUR 80 million Net debt excluding lease liabilities and railroad loan 1 EUR 55 million Events after reporting period Zinc streaming agreement with Nyrstar; initial purchase price received $335m Early full repayment of $320m Project Term Loan Facility Closing of all nickel, zinc and foreign exchange risk hedging positions with €45m net proceeds Additional cash buffer to Talvivaara Sotkamo Ltd from –Outokumpu convertible of €5m 2 –Varma facility of €25m 1 Railroad loan to be repaid by the reimbursement from the State of Finland in 2010-2011 2 Non-dilutive to Talvivaara Mining Company; Talvivaara to convert a pro-rata amount of existing intragroup loans 5

7 Operations - overcoming ramp-up challenges Problems with fine crushing circuit resolved with commissioning of upgraded crushing circuit –Planned circuit capacity of 60,000t per day sufficient for expanded production capacity –Some remaining ramp-up for Q1 2010; two tertiary crushers to be added if not otherwise achieved Talvivaara no longer reliant on contractor crushing following modifications to the primary crusher Amount of leach solution reached levels necessary for continuous production from September –Minor hold-ups caused by technical problems during Q4 2009 at the metals recovery plant; resolved after re-lining of reactors 6

8 Key operational figures Q4 2009 Q1-Q3 200920092008 Mining Blasted oreMt3.57.310.83.0 Excavated wasteMt1. Materials handling Stacked oreMt3. Bioheapleaching Ore in primary heap at the end of periodMt11. Metals recovery Nickel sulphide productionDMT8576681,525 - Nickel metal contentt410325735 - Zinc sulphide productionDMT3,8271,4445,271 - Zinc metal contentt2,3138203,133 - 7

9 Recent progress – bioheapleaching performing above target Heap section 2 completed in early January –Early re-precipitation phase over in early February –Improved aeration has shortened the re- precipitation phase to 1-2 months Heap section 1 suffered from re-precipitation due to high temperatures, insufficient aeration and extended circulation time of irrigation solution –Recent development promising after partial turning over of heap and increased aeration Metal grades in solution led to the metals plant –Nickel >2 g/l –Zinc >6 g/l 1 - 2 months Leaching kinetics in bioheap 8

10 Leaching performance compared to budget Early re-precipitation phase over Section 2 stacking completed Nickel in solution (mg/l) 9

11 Production up and running Mining department performing well Crushing still slightly below 22mtpa level, but improving –Decision on potentially adding tertiary crushers during Q1 Catalyst failure at hydrogen plant fixed –Metals recovery processes up and running 10

12 Research and development Biological iron removal from leach solution –uses local bacteria, reduces limestone consumption –successful pilot scale tests Recovery of uranium as yellow cake –uses a safe solvent extraction method –ongoing process development and plant design in cooperation with Outotec and Norilsk Nickel Manganese recovery –Electro-winning technology successfully tested –Decision to move forward pending partnering for production and marketing Optimisation of bioheapleaching process –Ongoing studies of factors and parameters involved Lime stone crushing plant 11

13 The uranium recovery process is designed to be safe –Best available technology and expertise will be used –Uranium will be recovered using a technically simple and safe solvent extraction process –The process will not change Talvivaara’s discharge levels into air, water systems or soil –The product will be properly packaged in airtight steel containers The relevant authorities will determine terms and conditions for safe operation and the process will be properly monitored by them Talvivaara’s planned uranium process is safe for people and for nature 12

14 Uranium recovery - operational and financial considerations Planned annual production approximately 350 tonnes The planned production will make Finland almost self- sufficient in uranium The uranium process is estimated to employ directly approx. 20 and indirectly around 50 people Estimated capital expenditure approx. EUR 30 million Annual production costs estimated at approx. EUR 2 million Price of yellow cake 2005-2010 (USD/lb) 13

15 Geology - building data for further resource increases 22,500 meters drilled in 2009 Target 1: Kuusilampi Southern area infill drilling –completed in Q3 Target 2: Kuusilampi Northern extension drilling- –initiated in Q4 –6,000m completed by year end Target 3: Kuusilampi Central area geotechnical drilling Target 4: Kolmisoppi resource infill drilling Target 1 Target 2 Target 3 Target 4 14

16 Environment, Health and Safety – a priority for Talvivaara Environment Environmental processes being prepared for ISO 14001 certification; audit of environmental system targeted for Q4 2010 Personnel Current number of personnel 308 Training programmes and recruiting continuing Safety Launch of successful Work Group Safety Challenge in February 2009 6 minor LTI’s recorded in 2009 11 LTI/million man hour safety rating-significantly below industry average 15

17 Market outlook Source: Reuters Nickel price and LME stock level Recovery of base metals prices from March 2009 lows Increased Chinese buying activity during first half of the year Demand in Western markets not yet fully recovered Short term correction remains possible Long term confidence in the fundamental strength of metal prices and demand 16

18 2010 operational outlook Focus on production ramp-up process 2010 targeted production: –Approximately 30,000t nickel –Approximately 50,000t zinc 17

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