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Talvivaara unfazed by commodity price reversal

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Date: Friday 29 Aug 2008

LONDON (ShareCast) - Talvivaara Mining remains confident its production costs will be low enough to mine profitably when it starts production in October, despite the decline in nickel and zinc prices over the summer.

In a statement accompanying interim results, the company said recent mine closures by competitors suggest that nickel prices in the range of $18,000 to $20,000 per tonne are "at or below the marginal cost of production for many operations and can hence be seen as the likely floor price of nickel in the present demand environment."

Talvivaara's estimated production costs are substantially below this range, the company said.

The company’s pre-tax loss in the first half of the year was trimmed to €4.5m from €8.6m a year earlier.

Cash and cash equivalents at the end of the reporting period was €74.1m, after capital expenditure of €173m in the first half of the year.

The company made an initial request for a draw-down of $165m from the $320m project term loan facility on 28 August.

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