Nyrstar - Talvivaara operational update

Talvivaara this morning released its 3Q13 operational update. During the quarter, Talvivaara producted 2,595t of nickel and 5,645t of zinc. Year-to-date, production stands at 7,103t of nickel and 13,239t of zinc. Metals production continued to be impacted by low metal grades in the leach solution. In addition, a scheduled maintenance break at the metals recovery plant was held at the end of September with a total stoppage time of 7 days.

Talvivaara continues to anticipate a significant increase in production in 2H13 compared to 1H13 as newly stacked heaps are taken in production in 4Q13 (positively impacting metals grade in leach solution) and no maintenance stoppages are scheduled for remainder of the year.

The company has launched a cost savings program in June 2013 targeting € 100m cash flow effect from cost savings and productivity improvements within 12 months.

Given the low nickel price environment and negative impact on production from the excess water on older ore heaps, Talivaara’s liquidity position has weakened more than anticipated. As a result, the company is undertaking an assessment of all available funding options to secure its financial and operational flexibility and a sufficient level of liquidity going forward.

Conclusion:
Production in 3Q13 still came weak as impacted by low metal grades in leach solution due to the prolonged effects of excess water in the older heaps as well as scheduled maintenance shutdown at the end of September. Production in 4Q13 is expected to increase significantly as new heaps are taken into production and no scheduled stoppages are planned for the remaining of the year. In our scenario, we are banking upon Talvivaara to deliver 21kt of zinc in FY13. This will be a challenge but not impossible (would require 4Q13 production in-line with 4Q12).