»Interim report Q Joni Lukkaroinen CEO 25 October 2017

Transcription

1 »Interim report Q Joni Lukkaroinen CEO 25 October 2017

2 Nickel Cobalt Zinc Further processors Manufacturers

3 »Demand for metals is increasing in modern society Energy production and storage Sustainability Recyclability

4 »Q3 in brief Key points Net sales Q1 Q3 exceeded EUR 150 million profitability improved clearly. Metals production plant: quarterly production records in nickel and zinc as well as a yearly production record in zinc (Q1 Q3). Cooperation negotiations to adapt personnel resources were concluded.

5 » Average nickel and zinc prices increased» Markkinahinnat

6 01 Jan Mar Jun Sep Dec Mar Jun Sep 2017»Global market price of nickel increased in July August 13,000 12,000 11,000 Nickel price development 1 Jan Sept 2017 In Q3, average price was 10,528 USD/t 14.1% higher than in Q2. Compared with 2016 Q3, average price was 2.6% higher. 10,000 9,000 8,000 7,000 China s stainless steel production grew strongly; nickel producers made announcements regarding cuts in mine production. The decrease of LME s and SHFE s combined nickel stocks stopped in Q3 and were at the same level as in Q2, approx. 438,000 tonnes. Day price for nickel on the London Metal Exchange (USD/t) Day price for nickel on the London Metal Exchange (USD/t), 90 day average Data source: Metal Bulletin LME = London Metal Exchange SHFE = Shanghai Futures Exchange

7 1 Jan Mar Jun Sep Dec Mar Jun Sep 2017»Global market price of zinc at a good level 3,500 3,000 2,500 2,000 1,500 1,000 Zinc price development 1 Jan Sept 2017 In Q3, average price was 2,963 USD/t 14.1% higher than in Q2. Compared with 2016 Q3, average price was 31.4% higher. Good price level resulted mainly from the decrease of stocks, which has continued for a long time. LME s and SHFE s combined zinc stock levels continued to decrease in Q3 by approx. 38,000 tonnes and were approx. 318,000 tonnes. Day price for zinc on the London Metal Exchange (USD/t) Day price for zinc on the London Metal Exchange (USD/t), 90 day average Data source: Metal Bulletin LME = London Metal Exchange SHFE = Shanghai Futures Exchange

8 » Ramp-up and stabilisation of operations continued

9 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q3 Q ,495 2,158 3,046 1,555 1,754 2,370 4,885 5,086 5,361 3,875 6,630 4,787 7,197 5,176 5,506 7,761 10,894 11,757 10,070 11,038 13,192»Steady increase in nickel production 20,000 Kaivostuotanto (t) Ore processing (t) Bioliuotus Bioleaching (t) Metals production mto plant (t) 15, , , , : 34,300 t (Q1 Q3) 2016: 37,042 t 2017: 17,644 t (Q1 Q3) 2016: 11,584 t 2017: 15,469 t (Q1 Q3) 2016: 9,554 t

10 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q ,578 5,873 3,497 4,070 8,720 10,380 6,328 12,776 10,697 12,657 8,680 13,027 9,791 14,767 11,204 12,242 20,612 22,144 20,239 23,149 25,697»Yearly record in zinc production 40,000 Ore processing (t) Bioleaching bl (t) Metals production MTO plant (t) 30, , , , : 69,085 t (Q1-Q3) 2016: 70,299 t 2017: 36,064 t (Q1 Q3) 2016: 27,868 t 2017: 33,237 t (Q1 Q3) 2016: 22,575 t

11 »Unit costs per nickel tonne decreased as predicted Ore mining and processing volumes were at target level. Bioleaching performance stayed at a good level. Construction work of the fourth secondary bioleaching heap continued to increase production capacity. The autumn maintenance stoppage at the metals production plant in September October limited production and sales.

12 » Occupational safety culture developed well

13 »New record: 131 days without injuries resulting in absence Lost-time injury frequency Terrafame s employees 23.3 Partners Terrafame employees Target in 2017 < Rolling Liukuva months kk employees Lost-time injury frequency = number of injuries per one million person-hours worked. Situation in 30 Sep 2017.

14 » Environmental safety at good level Vesikuva» Ympäristöturvallisuus Sulamisvesien käsittely sujui hyvin luparajojen puitteissa

15 Jan April July Oct Jan April July Oct Jan April July Oct Jan April July Oct Jan April July Oct Jan April July Oct Jan April July Oct Jan April July Oct»Environmental effects are widely monitored Terrafame monitors the mine s operations and its effects based on an extensive and detailed environmental monitoring programme agreed with the supervisory authority. The company also actively collects and analyses additional samples from the mine area and its surrounding environment. Terrafame keeps close contact with nearby residents, and their observations are taken into consideration Environmental observations by neighbours Other Water Dust Vibration Noise Smell

16 <0.02 <0.057 < ,988»Approximately half of 2017 sulphate quota unused Concentrations in the water discharged 1 Jan Sept 2017 Sulphate quota 16,300 t in 2017 Discharge pipe 15,000 t/a and old routes 1,300 t/a 0.3 1) mg/l 0.3 1) mg/l 0.5 1) mg/l 6 mg/l 4 mg/l 4,000 mg/l 10 1) µg/l 1.5 µg/l 3 µg/l 0.5 mg/l Concentrations in relation to permit limits Q1 2,306 Q2 3,012 Q1 Q ,794 t Q3 2,476 Cu Ni (mg/l) (mg/l) Zn (mg/l) Mn (mg/l) Fe (mg/l) SO 4 (mg/l) U (µg/l) Hg (µg/l) Cd (µg/l) Al (mg/l) Pb 2) (mg/l) Na 2) (mg/l) 1) Max. allowed concentration in a single sample 2) No permit limits for Pb and Na

17 » Liikevaihto kehittyi xxx» Terrafame is advancing towards a profitable business 17 26/10/20 17 Dokumentin nimi

18 Q Q Q Q Q Q Q »Net sales developed positively Liikevaihto Net sales, M Q3 s record production volume also evident in sales volumes Average global market price of nickel increased by 14.1% compared with Q Average price of zinc also increased by 14.1% compared with Q2. In Q3, the average exchange rate of the dollar against the euro decreased by 6.6% compared with Q2. The autumn maintenance stoppage limited production and sales volumes. 2017: M (Q1 Q3) 2016: M

19 Q Q Q Q Q Q Q Q Q Q Q Q Q Q »EBITDA developing to right direction EBITDA excl. change in WIP, M EBITDA, M : M (Q1 Q3) 2016: M 2017: -3.7 M (Q1 Q3) 2016: M WIP = value of work in process

20 »Investments in the third quarter EUR 28,3 million Investments, M Key investments in Q3: The construction work of the fourth secondary bioleaching heap and a new waste rock area. The construction of a third hydrogen sulphide production line Q1 Q Q1 Q : 84.3 M

21 »»» Terrafame applies for Liikevaihto» Uraanin kehittyi Talous talteenotto xxx a permit to recover uranium 21 26/10/20 17 Dokumentin nimi

22 »Terrafame prepares to recover uranium Terrafame has decided to apply the government for a permit to recover uranium, in accordance with the Finnish Nuclear Energy Act. The permit application will be submitted in the weeks to come. If the government grants the permit, Terrafame estimates that uranium recovery could commence towards the end of The uranium recovery plant requires from Terrafame an investment of 10 million euros. Previously 75 million euros have been invested in the plant.

23 »Natural uranium can be found almost everywhere on Earth Natural resources must be used efficiently Uranium is present in the ore Terrafame is mining, but it is not recovered currently. Uranium recovery would be an addition but not a key factor for Terrafame s business. Very small concentration in the water The uranium concentration in the purified water discharged from the mine area was approx. 0.5 μg per litre in The Radiation and Nuclear Safety Authority recommends removing uranium from drinking water if the concentration exceeds 100 μg per litre. Responsible processing Transports will be done in accordance with authority regulations. The recovered natural uranium will be transported abroad from Finland for processing. In its environmental permit application, Terrafame is applying a permit to produce a maximum of 37,000 tonnes of nickel, 80,000 tonnes of zinc and 250 tonnes of uranium per year. The uranium concentration in normal tap water is approx. 1 μg per litre. The natural uranium recovered by Terrafame will be used in energy production.

24 »Near-term outlook Ramp-up and stabilisation of operations continues. Profitability will be systematically improved by focusing on operational cost-efficiency. We aim to further increase the production and delivery volumes of nickel, zinc and cobalt. We are studying two alternative options to upgrade the nickel product: 1. NiFe alloy for stainless steel production 2. Nickel and cobalt sulphates for battery applications

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