By Stephen Wilmot, 31 August 2010
Finnish miner
The gain didn't drop through to earnings, however, because of a surge in finance costs from €13.8m to €50.3m. That wasn't the result of higher levels of debt – in fact the company signed a zinc-supply deal with the global metals giant Nyrstar in February that allowed it to repay a $320m (£208m) loan. But the US Dollar-Euro exchange rate moved against it, triggering a hefty loss.
Talvivaara also has ongoing teething problems in the extraction process – known as bioheap-leaching. The company again guided down expectations for this year's nickel output from the previous 15,000-25,000 tonne bracket to just 15,000 tonnes. Last year the company faced crushing problems; this year it's the lack of air circulation in one of its ore heaps, as well as hydrogen sulphide fumes that have been noticed by keen-nosed locals. Still, with new production records set each month in the second quarter, and a new production line started in June, management is confident that it can hits its nickel output target of 50,000 tonnes by 2012.
Broker Finncap expects full-year pre-tax profits of €9.4m and EPS of 7.7c (2009: €75.1m loss/19c loss per share).
| TALVIVAARA (TALV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 385p | MARKET VALUE: | £ 944m | |
| TOUCH: | 385-386p | 12-MONTH HIGH: | 502p | LOW: 341p |
| DIVIDEND YIELD: | nil | PE RATIO: | NA | |
| NET ASSET VALUE: | 146p | NET DEBT: | 52% | |
| Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (c) | Net div per share (c) |
|---|---|---|---|---|
| 2009 | 1.8 | -14.7 | -4.0 | nil |
| 2010 | 46.9 | -45.3 | -12.0 | nil |
| % change | +2535 | - | - | - |
|
£1=E1.22 |
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More analysis of company results
IC VIEW:
Talvivaara is starting to make headway with both sales and production, and its shares could yet bounce when the ongoing extraction problems are ironed out and cashflow turns positive. Meanwhile, however, they could prove susceptible to commodity price volatility. Fairly priced.
visible-status-Public story-url-Talvivaara starts to make sales.xml
