Stock Exchange
Release
Talvivaara Mining
Company Plc
28 November
2012
Talvivaara
Operational and Resource Update
Measures to improve
water balance and bioheapleaching performance in focus
32% increase in total resources to 2,053Mt of
ore
Highlights
Full-year 2012
nickel production guidance updated to approximately 13,000t
Metals recovery plant successfully restarted
following stoppage related to the gypsum pond leakage
Ore production to remain restricted until mid-2013 due to excess
water in the open pit; near term focus on enhancing recovery of existing metals
inventory in the heaps
Reverse osmosis
water purification plant successfully commissioned; other measures to improve
water balance advancing aided by special organizational changes
32% increase in measured, indicated and inferred
resources to 2,053Mt, further confirming Talvivaara's long mine life
Production
guidance
Talvivaara has stated in its Production
Update of 15 October 2012 and its Q3 Interim Results of 8 November 2012 that it
anticipates its fourth quarter production to increase over the 4,030t of nickel
achieved in the third quarter. Following the stoppage of its metals recovery
plant between 4 and 21 November 2012 due to the previously announced gypsum pond
leakage, the Company has re-assessed this target and now anticipates its fourth
quarter and full-year 2012 production to reach approximately 2,500t and 13,000t
nickel, respectively.
Talvivaara anticipates announcing its nickel
production guidance for the coming year in early 2013. The key drivers for the
production level include the near term development in the water balance, the
timing of re-start of ore production and the effectiveness of bioheapleaching
following the measures being taken to reverse the recent effects of excess water
and insufficient aeration. Whilst the full impact of these factors will only
become clear over the course of the coming year, the Company anticipates to be
in a position to adequately estimate their effect during the first quarter.
Furthermore, Talvivaara continues to believe that the existing, over 55,000t
nickel inventory in the heaps will provide sufficient supply of metals for a
reasonable production ramp-up in 2013 despite the temporary suspension of ore
production.
Operational update and
key focus areas
Metals
recovery
As announced earlier, Talvivaara received on
21 November 2012 the permit from the Kainuu Centre for Economic Development,
Transport and the Environment ("Kainuu ELY Centre") to re-start its metals
recovery plant. The Company had suspended the plant temporarily since 4 November
2012 following the gypsum pond leakage and related risk analyses and steps taken
to ensure the safety of operations and to minimize the environmental impact of
the leakage. Since a successful re-start on 21 November 2012, operations at the
plant have ramped up according to plan, and the facility has returned to the
stable utilization rates achieved before the suspension. Solution flow rates at
the plant are now close to 1,400 m3/h and ramp-up to around 1,600 m3/h is
anticipated over the coming weeks.
Talvivaara commenced production of saleable
quantities of copper sulphide in October 2012. For the time being, the product
is being sold under spot arrangements.
Construction of the uranium recovery circuit
is on track for completion by early 2013, and uranium production will start
after the related environmental permit has been received. The decision on the
environmental permit is expected in May 2013 in connection with the general
update of the mine's environmental permit. The permit decision was previously
expected in late January or February 2013, and the Company now anticipates a 3-4
month delay in the process due to certain further clarification requests
expected from the permitting authority due to the gypsum pond leakage.
Bioheapleaching
Bioheapleaching has suffered from the
historically heavy rainfall experienced in the Kainuu region throughout the
spring, summer and autumn. As a result, a significant volume of excess water has
accumulated into solution circulation and diluted metal grades in solution as
well as affected the efficiency of heap aeration and reduced evaporation. Nickel
grades in solution pumped to metals recovery have declined from slightly below
2.0 g/l at the start of the year to 1.4-1.5 g/l currently.
The Company has undertaken an extensive study
to further identify the factors impacting leaching performance, and as a result
identified a number of additional measures to improve leaching results. As part
of the study, production heap sections have been opened to determine leaching
properties within the heap. Whilst some areas in the opened sections had been
well oxidized and leaching results were optimal, several other areas were found
where aeration had been inefficient and where the ore remained clearly
unreacted. Multiple changes are being implemented to ensure constant and
balanced distribution of air within heaps, including elimination of aeration
pipe blockages, alterations in the physical design of future primary heaps and
aeration pipes, and an improved drainage system. In the near term, the
accelerated rate of reclaiming and re-stacking of the existing primary heaps
also continues in order to enable efficient recovery of the existing nickel
inventory in the heaps. Preliminary results since September indicate
significantly improved leaching, as less effectively leached sections are being
better oxidized.
Development work is also ongoing to improve
agglomeration quality, as the moisture content and stability of agglomerates is
a key factor affecting leaching times and recovery rates. Copper heap leaching
operations have reported up to 30-50% improvements in leaching times depending
on the quality of agglomerates.
Leaching results may also be impacted in part
by the accumulation of certain elements in the solution circulation, the impact
of which is being managed by controlling their concentration in irrigation
solution.
Ore
production
As previously announced, Talvivaara
discontinued mining and crushing operations on a temporary basis from the
beginning of September due to the prevailing water balance situation. The
temporary production scheme alteration has proceeded as planned, and anticipated
cost savings are being realized.
Talvivaara previously anticipated ore
production to re-start around year-end 2012, but the recent gypsum pond leakage
and overall water balance issues have postponed the Company's target for
re-start of mining and crushing operations. Talvivaara currently expects to
re-commence ore production in mid-2013 once the open-pit has been de-watered and
the overall water balance improvement measures have been implemented.
Cost
savings
Talvivaara anticipates continuing to realize
significant cost savings as a result of the temporarily suspended ore
production. Given the recent disruptions in the Company's metals production,
additional costs incurred in stemming the gypsum pond leakage and minimizing its
environmental impact as well as the prevailing weakness in the nickel price,
Talvivaara considers systematic cost savings to be one of its key targets in the
near term.
Water balance
management
Organisational changes
In order to facilitate an efficient and
sustainable solution to the water balance issues, Talvivaara has established a
temporary special organization focused on the subject. The special organization
is headed by Chief Mining Officer Jari Voutilainen, reporting to CEO Pekka
Perä. Several of Talvivaara's key experts have been seconded to the team which
focuses on the planning and execution of necessary water storage and pumping
arrangements as well as waste water neutralization measures.
Operational measures
In the medium term, Talvivaara will target a
nearly closed circuit water circulation system, reducing the risk of weather
conditions impacting the Company's operations or environmental safety.
Talvivaara has commissioned the new reverse osmosis -based water treatment plant
in November 2012, and additional capacity will be installed next spring. The
reverse osmosis technology is a key step in achieving a closed circuit system,
and enables the Company to significantly reduce or completely stop raw water
intake into the process.
Environmental update
following the gypsum pond leakage
As a result of the gypsum pond leakage,
Talvivaara had to discharge some leakage waters into the environment in a
controlled manner. Due to immediate safeguarding measures, the majority of
leakage waters were however contained within the mining concession area. Only
local environmental impact within the immediate vicinity of the mine area has
been detected to date, and the Company and authorities continue to monitor the
situation.
Organisational
changes
As announced on 15 November 2012, Tapani
Järvinen has been appointed Chairman of the Company's Board of Directors and
Pekka Perä has been appointed Chief Executive Officer. Both 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's previous Chief Executive Officer, Harri Natunen, has been appointed
Chief Operations Officer.
Resource
update
Talvivaara's recent drilling campaigns have
focused on the Kolmisoppi deposit, where open-pit mining operations have not yet
commenced.
The total Mineral Resources, as defined by
the JORC code, increased by 32% to 2,053Mt from the total of 1,550Mt announced
in October 2010. The increased resources contain 4.5Mt of nickel and 10.3Mt of
zinc, up from 3.4Mt and 7.6Mt in 2010, respectively. Talvivaara's current total
Mineral Resources are presented in the table below.
Category
Year
Mt
Nickel %
Cobalt %
Copper %
Zinc %
Uranium %
Measured
2012
504.0
0.23
0.02
0.13
0.50
0.0017
2010
432.2
0.23
0.02
0.13
0.50
0.0017
Indicated
2012
800.5
0.23
0.02
0.13
0.51
0.0017
2010
689.2
0.23
0.02
0.13
0.50
0.0018
Subtotal
2012
1,304.5
0.23
0.02
0.13
0.50
0.0017
2010
1,121.4
0.23
0.02
0.13
0.50
0.0018
Inferred
2012
748.3
0.21
0.02
0.12
0.49
0.0018
2010
428.8
0.20
0.02
0.12
0.47
0.0017
Total
2012
2,052.8
0.22
0.02
0.13
0.50
0.0017
2010
1,550.2
0.22
0.02
0.13
0.49
0.0017
The resource
increase further confirms the long mine life of the Talvivaara deposits. Further
excellent exploration potential remains around the currently known ore body, and
2013 exploration targets focus on infill drilling at the Southern and Northern
parts of the Kolmisoppi deposit and the area between the Kuusilampi and
Kolmisoppi deposits.
Talvivaara has undertaken a project to also
update its ore reserves estimates and anticipates announcing the new reserves
during the second half of 2013.
Enquiries
Talvivaara Mining Company Plc Tel
+358 20 7129 800
Pekka Perä, Chief Executive Officer
Saila Miettinen-Lähde, Deputy CEO and CFO
Talvivaara Mining
Company Plc
Talvivaara Mining Company is an
internationally significant base metals producer with its primary focus on
nickel and zinc using a technology known as bioheapleaching to extract metals
out of ore. Bioheapleaching makes extraction of metals from low grade ore
economically viable. The Talvivaara deposits comprise one of the largest known
sulphide nickel resources in Europe. The ore body is estimated to support
anticipated production for several decades. Talvivaara has secured a 10-year
off-take agreement for 100 per cent of its main output of nickel and cobalt to
Norilsk Nickel and entered into a long-term zinc streaming agreement with
Nyrstar NV. Talvivaara is listed on the London Stock Exchange Main Market and
NASDAQ OMX Helsinki and is included in the FTSE 250 Index. Further information
can be found at www.talvivaara.com.