Exploiting new resources Talvivaara Mining

EXPLOITING NEW RESOURCES

The Talvivaara Mining Company is a leading base metals provider located in Finland. Philip Yorke looks at how the company is maximising its potential and exploiting new income opportunities in association with other global mining consortiums.

Talvivaara Mining is a major European producer of base metals with a focus on nickel and zinc products. The company’s main asset is its Talvivaara nickel mine in Sotkamo, Finland. Talvivaara’s polymetallic deposits comprise one of the largest known sulphide nickel resources in Europe, with more than 1,121 million tonnes of ore available, measured in indicated categories. This resource is sufficient to support production at existing levels for a further 46 years.

The planned annual nickel production is 50,000 tonnes per annum, with by-products of zinc, copper and cobalt estimated to amount to a further 100,000 tonnes of material per annum. Of this total, zinc is expected to represent over 90 per cent of these production volumes.

The Talvivaara Group supplies metal intermediaries to companies with metal refining operations and has recently entered a 10-year off-take agreement with Norilsk Nickel Harjavalta Oy for the entire output of the mine’s nickel and cobalt production at market prices.

Recovery of uranium enhances sales

In February 2010 Talvivaara Mining announced that it was planning to initiate the recovery and exploitation of uranium, obtained as a by-product of other metals in the form of a uranium intermediate known as ‘yellow cake’. The recovery will be achieved through its main leaching process by using safe and technically simple solvent extraction processes, which are currently widely applied to metals recovery operations. The planned investment in the new solvent extraction plant was estimated at €30 million with annual production costs expected to be around €2 million set against an annual production volume considered to be 350 tons.

Talvivaara’s CEO, Pekka Pera said at the time of the announcement, “The current project looks at exploiting valuable metals present in our ore body by-products as provided by the Finnish mining legislation. The development of our solvent extraction method demonstrates the innovative skills of our internal team and our partner organisations and is a perfect fit with our strategy of carefully recovering precious and useful substances from our ore.”

Following on from its commitment to make a significant investment in this area, Talvivaara mining has successfully recovered uranium in the form of ‘yellow cake’ from its ore byproducts. This success subsequently led to a

major agreement with Cameco Corporation, a major international uranium producer based in Saskatoon, Canada in February 2011.

The Cameco Corporation is one of the world’s largest producers of uranium and its products are used to generate ‘clean’ electricity in nuclear energy installations around the world. Cameco will continue to provide technical assistance to Talvivaara Mining in the design, construction and commissioning and operation of the uranium extraction circuit to be constructed at Talvivaara’s Sotkamo mine.

Under the terms of the agreement, Camaco will provide an up-front investment of up to €60 million to cover the construction costs of the uranium extraction facility. The up-front funding for the project means that the company will not risk diluting its strong balance sheet and the sale of its uranium products worldwide will provide a solid, additional revenue stream for the company.

Second production line lifts sales

In the second half of 2010 Talvivaara Mining successfully commissioned a second production line at its metals recovery plant for zinc sulphide precipitation. This was followed by the production of nickel sulphide precipitation a week later and reached its full capacity expectations within a few months of commencing operations.

Pera commented, “We are delighted that the second production line has been brought on stream as planned, after a smooth and successful commissioning process. This is a crucial milestone in our ramp-up and gives us the much needed capacity to take our production volumes to their planned levels and strengthens Talvivaara’s position as a growing base producer of increasing global significance.”

The company’s current focus remains on the ramp-up to its target of 50,000 tons per annum nickel production rate at the Talvivaara mine.

However, the company will continue to assess options to deliver long-term value to shareholders through further organic growth of its assets at its Sotkamo mine. Talvivaara’s unique and proven ‘bioheapleaching’ technology and its large resource base, makes production expansion at Talvivaara a preferred strategic option for the company.

New zinc streaming project

Early in 2010, Talvivaara Mining entered into a long-term ‘Zinc in Concentrate Streaming Agreement’ with Nystar NV in line with its strategic guidance document delivered in 2009. Under the terms of the agreement, Talvivaara Mining will deliver all its ‘Zinc in Concentrate’ production to Nystar until a total of 1,250,000 metric tonnes has been delivered. This amount is the equivalent to approximately 2 million tonnes of zinc concentrate at a grade of 65 per cent.

Based upon Talvivaara’s projections, the company expects to ramp up production to around 90,000 tons per annum of ‘Zinc in Concentrate’ by 2012 with deliveries occurring over a period of between 10 to 15 years.

Talvivaara Mining is in good company with Nystar NV. The company is a leading, global multi-metals business, producing significant quantities of zinc and lead, as well as other precious metals such as silver, gold and copper. Nystar is listed on the NYSE Euronext Brussels under the symbol NYR. Talvivaara Mining is listed on the London stock exchange main market and Nasdaq OMX Helsinki and is included in the FTSE 250 Index. n