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Talvivaara Mining Company (LSE:TALV) assured its shareholders the company has enough cash to support its operation for the rest of the year and its employees are not endangered of losing their jobs.
The base metals miner made the statement today, in response to “recent publicly reported claims regarding the development of the Company’s cash position during the remainder of the year and ongoing or planned personnel reductions” which the miner said were incorrect.
Woes of the company’s liquidity position and its implication to the labour force sparked after the company reduced its nickel production output guidance by the year-end following heavy rains and subsequent flooding that disrupted production from its Sotkamo mine in Finland.
That led to the company cutting its production target from a range of 25,000 to 30,000 tonnes to only about 17,000 tonnes by the end of 2012.
Net sales of nickel fell 30.4% to €72.5 million for the period January to June 2012, pulled down by lower price of the said commodity, as weak demand for stainless steel still hangs in Europe, the United States, and other developed economies.
A loss of €22.3 million was posted for the miner’s first six months in contrast with an operating profit of €10.4 million for the comparable period a year ago, nearly four times as much as the loss the company made for the whole of 2011.
The worries may not be totally unfounded. Net debt of the company is around €604.4 million as at 30th June 2012, following the issue of senior unsecured bond amounting to €110 million and an additional loan of €20 million,
But Talvivaara already stated earlier it will still be able to continue “in operational existence” , adding that the firm has €128 million in cash to keep it afloat.
“Talvivaara anticipates the Company’s cash reserves to remain sufficient regardless of the low nickel price on the basis of current cash position and previously announced near-term production and cost savings measures,” the company affirmed today.
Shares were up 6.5% to 133.50 pence at 2:40 PM GMT, hours after the assurance was announced.
Company Spotlight
Talvivaara Mining Company plc is a base metal producer focussing on nickel and zinc, produced from its main asset in Finland. The company is listed on the main market of the London Stock Exchange.
