27% 5,920 5,840 5,506 5,176 15 000 Zinc 15,000 4,787 higher - - PowerPoint PPT Presentation

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27% 5,920 5,840 5,506 5,176 15 000 Zinc 15,000 4,787 higher - - PowerPoint PPT Presentation

Nov 04, 2022 301 likes •574 views

Interim report Q3 2018 Joni Lukkaroinen CEO 25 October 2018 Key events in July September By the end of period, the cumulative net sales exceeded the sales of full year 2017. EBITDA EUR 12.9 million and operating profit EUR 4.7

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SLIDE 1

»Interim report

Q3 2018

Joni Lukkaroinen CEO 25 October 2018

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SLIDE 2

»Key events in July–September

  • By the end of period, the cumulative net sales exceeded

the sales of full year 2017.

  • EBITDA EUR 12.9 million and operating profit EUR 4.7 million.
  • Positive free cash flow from operations.
  • The third hydrogen sulphide production line taken into use.
  • Quarterly records reached in nickel and zinc production.
  • The major technology agreements of battery chemicals plant

were made with key equipment suppliers.

  • Environmental safety at good level.
  • Production mainly in closed loop.
  • Emissions into waterways clearly under the

environmental permit.

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SLIDE 3

» Metallien hinnat

kehittyivät myönteisesti

päivitettävä

» Metallien hinnat

kehittyivät myönteisesti

päivitettävä

»Otsikko

Päivitä kuva

»Nikkelin ja sinkin

hinnat

»Prices affected by

developments in global market

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SLIDE 4

»Nickel price at higher level than the previous year

  • In Q3, average price 13,266 USD/t

which was 8.4% lower than in Q2.

  • Compared with 2017 Q3, average

price was 26.0% higher.

  • The combined stock levels of LME

and SHFE decreased by appr. 50,000t in Q3 and were below 250,000t at the end of September.

  • Price development was affected by

the unclarities related to trade between the United States and China.

6 000 8 000 10 000 12 000 14 000 16 000 18 000 1.1.16 31.3.16 29.6.16 27.9.16 26.12.16 26.3.17 24.6.17 22.9.17 21.12.17 21.3.18 19.6.18 17.9.18

Data source: Metal Bulletin LME = London Metal Exchange, SHFE = Shanghai Futures Exchange

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

Nickel price development 1 Jan 2016–30 Sep 2018

18,000 16,000 12,000 10,000 8,000 6,000 14,000

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SLIDE 5

1 000 1 500 2 000 2 500 3 000 3 500 4 000 1.1.16 31.3.16 29.6.16 27.9.16 26.12.16 26.3.17 24.6.17 22.9.17 21.12.17 21.3.18 19.6.18 17.9.18

»Zinc price showed a decrease

  • In Q3, average price 2,537 USD/t

which was 18.5% lower than in Q2.

  • Compared with 2017 Q3, average price

was 14.4% lower.

  • The combined stock levels of LME

and SHFE decreased by appr. 100,000t in Q3 and were appr. 230,000t at the end of September.

  • The price development was driven by

the effects of the United States import duties as well as the weakening demand in the Chinese market.

Zinc price development 1 Jan 2016–30 Sep 2018

Data source: Metal Bulletin LME = London Metal Exchange, SHFE = Shanghai Futures Exchange

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 4,000 3,500 2,500 2,000 1,500 1,000 3,000

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SLIDE 6

»Production records

in main products

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SLIDE 7

»Ore stacking to bioleaching continued as planned

Nickel and zinc to primary bioleaching (t) 23,594 24,803 24,269 22,742 25,697 23,149 20,239 10,630 11,791 12,234 11,900 13,192 11,038 10,070

10 000 20 000 30 000 40 000 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q3 2018 Nickel Zinc Q1–Q3 2018: 34,655t Full year 2017: 46,200t Q1–Q3 2018: 72,693t Full year 2017: 91,827t 40,000 30,000 20,000 10,000

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SLIDE 8

»Quarterly records at the metals production plant

Zinc Q1–Q3 2018

37%

higher compared to Q1–Q3 2017. Nickel Q1–Q3 2018

27%

higher compared to Q1–Q3 2017. Nickel and zinc production (t) 16,530 14,096 15,008 13,772 12,242 11,204 9,791 7,326 5,920 6,421 5,840 5,506 5,176 4,787

5 000 10 000 15 000 20 000 25 000 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Nickel Zinc Q1–Q3 2018: 19,667t Full year 2017: 20,864t Q1–Q3 2018: 45,634t Full year 2017: 47,205t 25,000 20,000 15,000 10,000 5,000 Q3 2018

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SLIDE 9

29.10.201 8 Dokumentin nimi

9

» Liikevaihto kehittyi xxx » Liikevaihto kaksinkertaistui

edellisvuoteen verrattuna

Kuva vaihdettava

» Liikevaihto kehittyi

erittäin hyvin

VAIHDA laivakuva

» Liikevaihto

kehittyi hyvin

päivitettävä

»Turvallisuus on

avainasioitamme

Päivitä kuva ja otsikko

»Työturvallisuus

suurennuslasin alla

»Occupational safety

in focus

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SLIDE 10

7.3 3.5 8.4 23.3

5 10 15 20 25 liukuva 2017 2016 2015

»Lost-time injury frequency for rolling 12 months 7.3

Lost-time injury frequency = number of injuries per one million person-hours worked.

665

Terrafame employees

Rolling 12 months

Lost-time injury frequency Terrafame employees

Target 2018 below 2.5

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SLIDE 11

»Sulphate load at a very low level

598 1,582 475 2,617 3,672

1 000 2 000 3 000 4 000 Q3 2018 Q2 2018 Q1 2018

Sulphate load of discharged water (t)

Q1–Q3 2018: 2,655t Full year 2017: 10,468t

  • Sulphate management system works

efficiently.

  • The discharge pipe was not used

during 9 August–5 September.

  • No discharge to southern waterways.
  • 2018 rolling sulphate load 16% of

annual permit quota.

Q3 2018 Quarterly average 2016 Quarterly average 2017 4,000 3,000 2,000 1,000

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SLIDE 12

»Bioleaching-based production process has 25–40% lower

carbon footprint

Mine Smelter Briquettes Cathodes Refinery Refinery Nickel sulphate Mine Metals extraction Hydr. nickel Nickel sulphide Refinery Nickel sulphate Mine Bioleaching Refinery Nickel sulphate

TERRAFAME’S PRODUCTION PROCESS

Concentrator Metals extraction HPAL Nickel sulphide

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SLIDE 13

» Ylösajo ja toiminnan

vakiinnuttaminen jatkuivat

Kuva ja otsikko vaihdettava

» Tuotannon ylösajo jatkui

Kuva vaihtoon

» Osavuosikatsaus

Q2 2018

Kuva: Juhani Viitanen

Joni Lukkaroinen toimitusjohtaja 27.7.2018

Kuva vaihdettava

»Osavuosikatsaus

Q3 2018

Joni Lukkaroinen toimitusjohtaja 25.10.2018

»Net sales exceeded

net sales of full year 2017

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SLIDE 14

»Q3 net sales EUR 86.0 million

86.0 76.7 85.7 67.6 63.9 47.2 41.3

10 20 30 40 50 60 70 80 90 100 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017

Net sales (EUR million)

Q1–Q3 2018: EUR 248.4 million Full year 2017: EUR 220.0 million

12.9 11.1 9.8 17.3 47.6

  • 32.9
  • 18.4
  • 40
  • 30
  • 20
  • 10

10 20 30 40 50 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017

EBITDA (EUR million)

Q1–Q3 2018: EUR 33.8 million Full year 2017: EUR 13.6 million Q3 2018 Q3 2018

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SLIDE 15

»In January-September, close to EUR 35 million allocated

to improving productivity and capacity

Key capital expenditures in Q3:

  • Detail engineering of the battery chemicals

plant and related earthwork construction

  • Construction of the foundations for

block 2 in waste rock area

  • Finishing the construction of production

block 4 in the secondary bioleaching area

  • Alteration work of the hydrogen

sulphide plant 2

20 40 60 80 100 2017 2018 Q3 2018: EUR 16.4 million Full year 2017: EUR 92.1 million

Q1– Q3: 69.7 Capital expenditure (EUR million) Q1–Q3: 53.0

2018 Sustaining capex (EUR 18.2 million) Improving productivity and capacity (EUR 34.8 million)

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SLIDE 16

310 305 301 296 246 205 242

100 200 300 400 500 600 700 30.9.2018 30.6.2018 31.3.2018 31.12.2017 30.9.2017 30.6.2017 31.3.2017

Equity and liabilities (EUR million)

30.9.2018

616 613 619 557 511 550 617

Equity Liabilities

»Terrafame has a good solidity

163.2 154.0 146.2 138.0 111.9 56.3 65.0

100 200 300 400 500 600 700 30.9.2018 30.6.2018 31.3.2018 31.12.2017 30.9.2017 30.6.2017 31.3.2017

Value of work in progress (EUR million)

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SLIDE 17

12.7

  • 5.5
  • 9.3
  • 17.4
  • 14.3
  • 12.2
  • 45.7
  • 50
  • 40
  • 30
  • 20
  • 10

10 20 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017

»Free cash flow positive in July–September

Free cash flow after sustaining capex (EUR million)

Q3 2018

Free cash flow after sustaining capex = EBITDA - change in working capital - sustaining capex

Q1–Q3 2018: EUR -2.1 million Full year 2017: EUR -89.6 million

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SLIDE 18

»Board of Directors of Terrafame

has made a positive investment decision

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SLIDE 19

»EVs are becoming more common in traffic

Outlook for deep electrification, 2017–2040 PHEV, FCEV, LSEV and BEV sales as % of total

Source: Roskill, 2018 PHEV = Plug-in hybrid electric vehicle, FCEV = Fuel cell electric vehicle LSEV = Low Speed Electric Vehicle, BEV = Battery electric vehicle

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SLIDE 20

»Battery chemicals plant project is proceeding to

detail engineering

  • Technological alternatives for the main processes

explored, detail engineering continued and earthwork construction started.

  • The major technology agreements were made with

key equipment suppliers.

  • The regional economic impact of the construction

and operations were published as part of the EIA reporting in October:

  • Export will grow appr. EUR 200 million annually.
  • Employment in will improve by 407–711 person-years.
  • Tax revenue will increase by EUR 88–90 million annually.
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SLIDE 21

»Nickel is one of the main materials in lithium ion battery

Ni Co Al Li

Nickel sulphate Cobalt sulphate Aluminium sulphate Lithium carbonate Lithium cathode material

Sources: Roskill 2017, BMO 2018

Plastic cover Positive terminal Safety valve Housing, negative terminal Cathode Separator Anode

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SLIDE 22

»Board of Directors of

Terrafame has made a positive investment desicion

  • During the ramp-up phase, Terrafame’s

production and financials have developed well and now is the time to seize new opportunities.

  • Value of the investment is EUR 240

million.

  • The production will be started at the

beginning of 2021.

  • According to our estimate, the new

plant will increase the company’s net sales by appr. EUR 200 million annually.

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SLIDE 23
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SLIDE 24

»Near-term outlook

  • Terrafame reached during the Q3 the production

level that was set as a target in autumn 2015.

  • After the ramp-up stage we will pay attention

particularly to operational efficiency, continuous improvement and increasing profitability.

  • Detail engineering, process equipment

procurement, earthwork construction and permit processes of the battery chemicals plant will be continued.

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SLIDE 25

www.terrafame.fi