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Joni Lukkaroinen, CEO28.7.2017
»Interim report Q2 2017
Further processors
Manufacturers
Nickel Zinc
Cobalt
»Q2 in a nutshell
Primary leaching area taken in full production use
In the secondary leaching area, heap 3 taken in production use
Annual maintenance stoppage of metals production plant at the turn of May and June
Quarterly records in nickel and zinc production
Supreme Administrative Court issued its decision on key environmental permit matters
Main points
27.7.2017 Dokumentin nimi4
» Markkinat
» Nickel price decreased –zinc price at good level
»Nickel price decreased in Q2
Q2 average price was 9,225 USD/t, which was 10.2% lower than in Q1.
Compared with Q2 2016, average price was 4.6% higher.
Indonesia decided to partially lift the export ban of nickel ore and Philippines cancelled their plans to shut down mines due to environmental reasons.
In Q2, combined nickel stock level of LME and SHFE decreased by more than 13,000 tonnes, totalling about 440,000 tonnes.
Data source: Metal BulletinLME = London Metal ExchangeSHFE = Shanghai Futures Exchange
7,000
8,000
9,000
10,000
11,000
12,000
30
.6.2
01
6
1.8
.20
16
2.9
.20
16
4.1
0.2
01
6
5.1
1.2
01
6
7.1
2.2
01
6
8.1
.20
17
9.2
.20
17
13
.3.2
01
7
14
.4.2
01
7
16
.5.2
01
7
17
.6.2
01
7
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
Price development for nickel 30 June 2016–30 July 2017
»Zinc price shows slight decline in Q2
Q2 average price was 2,596 USD/t, which was 6.6% lower than in Q1.
Compared with Q2 2016, average price was 35.3% higher.
Positive price development was driven by decreasing zinc stock levels as well as growing demand for zinc.
In Q2, combined zinc stock level of LME and SHFE decreased by approximately 199,000 tonnes, totalling about 356,000 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
1,000
1,500
2,000
2,500
3,000
3,500
30
.6.2
01
6
1.8
.20
16
2.9
.20
16
4.1
0.2
01
6
5.1
1.2
01
6
7.1
2.2
01
6
8.1
.20
17
9.2
.20
17
13
.3.2
01
7
14
.4.2
01
7
16
.5.2
01
7
17
.6.2
01
7
Price development for zinc 30 June 2016–30 June 2017
Data source: Metal BulletinLME = London Metal ExchangeSHFE = Shanghai Futures Exchange
» New records in production
Ready inOctober 2016 Ready in
May 2016
2,0 Mt of ore (estimate) Ready in May 2017
23
Ready inNovember 20154 Ready in
March 2017
1.0 Mt of ore
1
Ready inMay 2017
»Primary leaching area was taken in full production use in mid-May
»Stacking of ore to secondary heap 3 started
4
3
1
2
3rd layer ready in December 2016
2nd layer ready in April 2016
3rd layer ready in April 2017
5,1
76
4,7
87
3,8
75
2,3
70
1,7
54
1,5
55
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
Q2
20
17
Q1
20
17
Q4
20
16
Q3
20
16
Q2
20
16
Q1
20
16
mto
5,3
61
5,0
86
4,8
85
3,0
46
2,1
58
1,4
95
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
Q2
20
17
Q1
20
17
Q4
20
16
Q3
20
16
Q2
20
16
Q1
20
16
Kaivostuotanto (t)Bioleaching (t)
»Nickel production in the first half of 2017 exceeded production of the whole year 2016
11
,03
8
10
,07
0
11
,75
7
10
,89
4
7,7
61
6,6
30
,0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Q2
20
17
Q1
20
17
Q4
20
16
Q3
20
16
Q2
20
16
Q1
20
16
Kaivostuotanto (t)Ore processing (t) Metals production plant (t)
Q2
20
17
Q2
20
17
Q2
20
17
2016: 37,042 t 2016: 11,584 t 2016: 9,554 t
11
,20
4
9,7
91
8,6
80
6,3
28
4,0
70
3,4
97
0
5 000
10 000
15 000
20 000
25 000
30 000
Q2
20
17
Q1
20
17
Q4
20
16
Q3
20
16
Q2
20
16
Q1
20
16
MTO
12
,65
7
10
,38
0
10
,69
7
8,7
20
5,8
73
2,5
78
0
5 000
10 000
15 000
20 000
25 000
30 000
Q2
20
17
Q1
20
17
Q4
20
16
Q3
20
16
Q2
20
16
Q1
20
16
bl
»All-time quarterly record in zinc production
23
,14
9
20
,23
9
22
,14
4
20
,61
2
14
,76
7
12
,77
6
,0
5,000
10,000
15,000
20,000
25,000
30,000
Q2
20
17
Q1
20
17
Q4
20
16
Q3
20
16
Q2
20
16
Q1
20
16
2016: 70,299 t 2016: 27,868 t 2016: 22,575 t
Q2
20
17
Q2
20
17
Q2
20
17
Bioleaching (t)Ore processing (t) Metals production plant (t)
»Unit costs were lower than before
Ore processing volumes reached a record level.
Bioleaching performance were at a good level.
Construction of secondary leaching area to increase production capacity continued.
Annual maintenance stoppage of metals production plant at the turn of May and June limited production.
Unit costs of operations per nickel tonne decreased as estimated.
» Occupational safety improved
»Our lost-time injury frequency target for this year is below 5.0
Lost-time injury frequency = number of injuries per one million person-hours worked.
Contractors
693employeesTerrafame
757employees Includes nearly 90
summer employees
23.3
8.4
4.4
0
5
10
15
20
25
2015 2016 Liukuva 12 kkRolling 12 months
Lost-time injury frequencyTerrafame’s employees
» Ympäristöturvallisuus» Sulamisvesien käsittely sujui hyvin luparajojen puitteissa
Vesikuva
» Spring melt waters were managed well within permit limits
0.0
01
0.0
28
0.0
31
0.4
34
0.6
86
2,0
21
0.5
44
<0.0
2
<0.0
39
0.0
57
<0.0
01
18
9
»Spring increased the amount of water at the site in Q2
0.31)
mg/l0.31)
mg/l0.51)
mg/l6
mg/l4,000mg/l
4mg/l
101)
µg/l1.5µg/l
3µg/l
0.5mg/l
Cu (mg/l)
Ni (mg/l)
Zn (mg/l)
Mn(mg/l)
Fe (mg/l)
SO4
(mg/l) U
(µg/l) Hg
(µg/l) Cd
(µg/l) Al
(mg/l) Pb2)
(mg/l) Na2)
(mg/l)
Concentrations in water discharged from the site
1 July 2016–30 June 2017
Concentrations proportional to the permit limits
1) Maximum concentration permitted for an individual sample 2) No permit limits set for Pb and Na
0
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
7 000 000
8 000 000
9 000 000
10 000 000
11 000 000
1.7
.20
16
1.8
.20
16
1.9
.20
16
1.1
0.2
01
6
1.1
1.2
01
6
1.1
2.2
01
6
1.1
.20
17
1.2
.20
17
1.3
.20
17
1.4
.20
17
1.5
.20
17
1.6
.20
17
Target level
Volume of stored water at the site1 July 2016–30 June 2017
1
2
3
4
5
6
7
8
9
10
11
30 June 20173.7 Mm3
The spring overturn of Lake Nuasjärvi was completed down to bottom.
Lake Jormasjärvi, Lake Laakajärvi and waterways below them suit recreational purposes very well.
Condition of waterways below the mine has improved or remained unchanged.
Conductivity (Nuasjärvi J1, east of discharging point)
Surface Bottom
Further information: www.terrafame.fi/ymparisto
»Nearby lakes are monitored closely
»Effective sulphate management with two treatment plants
Sulphate quota 16,300 t in 2017Discharge pipe 15,000 t/a and old routes 1,300 t/a
H1: 5,318 t
Sulphate to bioleaching heaps from reverse osmosis plant (t)
0
1 000
2 000
3 000
4 000
5 000
6 000
2016 2017
Q11,564Q1
413
Q22,131
Q31,631
Q41,422
Q21,104
2017
27.7.2017 Dokumentin nimi19
» Liikevaihto kehittyi xxx
» Liikevaihto 41,3 miljoonaa euroa» Result weakened by nickel market
price and US dollar exchange rate
»Net sales EUR 88.5 million in H1
Record high production volumes were also noticeable in sales volumes in Q2.
In Q2, average price of nickel decreased by 10.2% on the world market compared with Q1.
Also average price of zinc decreased by 6.6% on the world market compared with Q1.
Average exchange rate of dollar against euro decreased from 1.06 to 1.10 (3.5%) in Q2.
Annual maintenance stoppage decreased production and sales volumes.
47
.2
41
.347
.6
21
.2
18
.0
14
.2
0
10
20
30
40
50
60
Q2
20
17
Q1
20
17
Q4
20
16
Q3
20
16
Q2
20
16
Q1
20
16
LiikevaihtoNet sales, EUR million
Q2
20
17
2016: EUR 101.0 million
»EBITDA without change in work in progress developed as planned
WIP = work in process
-60
-50
-40
-30
-20
-10
0
10
20
30
Q2
20
17
Q1
20
17
Q4
20
16
Q3
20
16
Q2
20
16
Q1
20
16
EBITDA, EUR million
Q2
20
17
-53
.1
-44
.8
-38
.5
16
.0
-18
.4
-32
.9
-53
,02016: -120.4 M€
-60
-50
-40
-30
-20
-10
0
10
20
30
Q2
20
17
Q1
20
17
Q4
20
16
Q3
20
16
Q2
20
16
Q1
20
16
EBITDA excl. change in WIP, EUR million
Q2
20
17
-53
.0
-45
.2
-40
.6
-31
.2
-33
.3
-24
.2
-53
,0
2016: -170.0 M€
»Investments into ramping up production
Construction of secondary leaching area to increase leaching capacity continued
Construction of foundations for a new waste rock area
Construction of a third hydrogen sulphide production line
Investments into increasing zinc filtration capacity as well as into alteration work required by productisation of copper
24
.9
16
.520
.2
18
.1
35
.2
10
.8
0
5
10
15
20
25
30
35
40
45
50
Q2
20
17
Q1
20
17
Q4
20
16
Q3
20
16
Q2
20
16
Q1
20
16
Investoinnit
Q2
20
17
Investments, EUR million
2016: EUR 84.3 million
»Near-term outlook
Target is to further increase the production and delivery volumes of nickel and zinc as well as to improve cost-efficiency, in accordance with the business plan.
Productisation of copper has begun and work is progressing.
We are exploring possibilities for further processing of nickel.
We continue preparing a study on rare earth elements and uranium.
We will apply for an environmental permit encompassing our entire operations by the end of August.
MISSIONWe are building
a sustainable world with high-qualitymetal products.
Terrafame Ltd.www.terrafame.com
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